Across Australia, New Zealand and Canada, thousands of metal fabrication, machining, and heavy industry businesses are quietly approaching a fork in the road.
- Founders in their late 50s or 60s are still running daily operations.
- The next generation is either not involved — or not interested.
- Valuation multiples are modest.
- And the buyers circling aren’t always aligned on culture, people or continuity.
In Canada alone, over 75% of SME owners plan to exit in the next decade — with fabrication shops, welders, machinists and industrial service firms heavily represented. In Australia and New Zealand, the industrial mid-market is deeply founder-dependent, and succession planning is often “deferred until further notice.”
If this sounds familiar, you’re not alone. And more importantly — you have options.
Why Succession Is So Complex in This Sector
Heavy industry and fabrication businesses are not like SaaS companies or retail chains. The value isn’t in code or brand — it’s in:
- Equipment
- People
- Reputation for reliability
- Deep process knowledge
And that creates a unique set of succession challenges:
- Third-party buyers don’t understand the business.
They see capex risk, not capability. - M&A multiples don’t reflect sweat equity.
Fabricators often operate at 2x–4x EBITDA — below founder expectations. - Employees are loyal — but overlooked.
Many founders don’t realise their team would take the reins, if given the chance.
This is where employee-led buyouts (ELBOs) and management buyouts (MBOs) come into their own.
Why Heavy Industry Is Well-Suited to ELBOs
Here’s why fabrication and industrial businesses are a natural fit for internal succession:
1. Deep Technical Know-How Is Internal
Your foreman, lead machinist or operations manager often knows more about tolerances, suppliers and safety than any external acquirer ever will.
2. Strong Cash Flow + Tangible Assets
Heavy equipment and contracts support vendor finance and asset-based lending — allowing the deal to be funded without personal guarantees from your team.
3. Retaining Skilled Labour Is a Strategic Asset
Welders, fitters, CNC machinists and boilermakers are hard to find. Keeping your team together through succession is a competitive advantage.
4. Operational Rhythm and Client Trust
The business runs on systems, lead times and relationships. Sudden leadership change can rattle clients. A planned ELBO maintains confidence.
5. Safety, Compliance and Reputation
In heavy industry, cutting corners is not an option. Internal succession protects the culture and risk management systems you’ve built.
What Is an ELBO — and How Does It Work?
An Employee-Led Buyout (ELBO) is a structured ownership transition in which you, the founder, exit the business by selling to your internal team — often using:
- Vendor finance — you’re paid over time using business cash flow
- Asset-backed lending — using plant, fleet or contracts to support financing
- Share schemes or discretionary trusts — to spread ownership gradually
- Post-deal support — coaching, governance and KPI monitoring
The key: your employees don’t need upfront capital. The business pays for itself through a structured deal.
Real Case Snapshot (Anonymised – Australia)
Business: Regional heavy steel fabricator specialising in structural steel for commercial builds
Size: ~$8M revenue, 35 FTEs
Challenge: Founder had no family successor and was facing burnout. External buyers wanted to consolidate operations and reduce headcount.
Solution:
- 70% sold to the Workshop Manager and GM through vendor finance
- A trust structure created for broader employee participation
- Founder retained 30% and exited completely after 2 years
- Coaching and reporting rhythms implemented post-deal
Outcome:
- Contracts retained
- Safety metrics maintained
- Founder paid out in full
- Staff retention remained above 90%
Source: Blue Harbour Capital engagement (anonymised)
Why Founders Like You Are Choosing ELBOs
“I want out — but not at any cost.”
You want liquidity, but not layoffs and culture collapse.
“My team already runs most of the business.”
Now they can run the ownership — with the right support.
“I don’t want to sell to the wrong buyer.”
Third-party sales can be high-risk, low-loyalty. Internal transitions give you control.
“I want to protect my people and reputation.”
An ELBO rewards loyalty and preserves operational trust.
How Blue Harbour Capital Supports Industrial Founders
We specialise in helping owners in fabrication, machining, and industrial services:
- Design and structure employee-led or management buyouts
- Use vendor finance, bank lending, or hybrid capital models
- Coach the new owner-leaders post-deal
- Set up 100-day plans, governance, safety accountability and KPI dashboards
- Ensure the handover is strategic — not just symbolic
We’re not investors.
We don’t take ownership.
We help you exit confidently and with continuity.
Five Steps to Begin Your Industrial Succession Plan
- Clarify your ideal exit
- What return do you need? What role do you want, if any?
- Identify potential successors internally
- Who already leads? Who could with coaching?
- Get a valuation and funding model
- Based on EBITDA, assets, contract stability, and team depth
- Explore structuring options
- Vendor finance, share trusts, aligned capital, or staged exits
- Plan the transition beyond the deal
- Coaching, communication, safety governance and performance tracking
Let’s Talk Succession in Heavy Industry
You’ve built a business that makes things others can’t. That hires people who are hard to replace. That matters to your clients, suppliers and team.
Now it’s time to build a future where it keeps running — even when you’re not in the room.
Contact Blue Harbour Capital for a confidential, practical conversation.