Phillips Fabrication MBO

Phillips Fabrication: Structuring a Mangement Buyout for a 35-Year Texas Fabricator

Location: Big Spring, Texas
Industry: Steel Fabrication & Crane Services
Transaction Type: Management Buyout
Trailhead Role: Transaction Advisory

The Business

Phillips Fabrication has served the Permian Basin and West Texas since 1989. The company provides custom steel fabrication, welding, crane and rigging services, and industrial component production for clients across agriculture, energy, and industrial sectors. Operating from their facility at Big Spring's Airpark, Phillips built a reputation on custom solutions—from one-off jobs to production runs requiring specialized CAD design and manufacturing.

The Situation

After 35 years building the business, the founders were ready to transition ownership. Rather than pursue an external sale, they identified succession candidates already embedded in the operation: a family member and a key employee with deep knowledge of the business, customer relationships, and local market.

Internal buyouts present a different set of challenges than traditional M&A. The buyers typically lack transaction experience. Financing structures must balance seller liquidity needs against buyer cash flow constraints. And the informal nature of family and employee relationships can obscure critical deal terms that would otherwise be negotiated explicitly.

Our Role

Trailhead represented the buyers in this transaction, providing:

Deal Structuring. We designed a transaction framework that balanced the sellers' retirement objectives with the buyers' ability to service acquisition debt while maintaining working capital for operations.

Debt Arrangement. We sourced and negotiated financing terms appropriate for the business size and cash flow profile, working with lenders experienced in owner-operated industrial businesses.

Transaction Support. We managed the process from LOI through closing, ensuring both parties maintained clear expectations and the deal reached completion without the miscommunication that frequently derails internal transitions.

Outcome

The transaction closed successfully, transferring ownership to the next generation of leadership while providing the founders a path to retirement. Phillips Fabrication continues operating under local ownership, preserving jobs and maintaining continuity for long-standing customer relationships across West Texas.