California Fencing Fabrication & Installation, 24-Year Contractor

$6.0M

Revenue

$2.3M

SDE

4.9x

Multiple

Subscribe Free

Read the full deal writeup

Get Free Access

Already a member? Sign in

Full Editorial Writeup

This is a 24-year-old fencing fabrication and installation company serving the California market since 2002. Unlike a pure installer that subcontracts or resells, the company fabricates its own product in a 6,000 sq ft facility and handles installation end to end, giving it control over margin and lead times. It generates $6M in annual revenue at a claimed 37.5% cash flow margin ($2.25M SDE, $2.1M EBITDA), which is unusually high for a construction-adjacent trade and warrants scrutiny.

The business runs with 12 full-time employees plus rolling stock, field equipment, and warehouse fabrication equipment. Revenue is driven by referrals, internet leads, and preferred commercial client relationships, and the seller positions the company as the leader in its regional market. The owner is selling due to relocation and is offering up to a year of full-time transition support plus a seller note of up to 10% of enterprise value.

At an $11M asking price against $2.25M SDE, the deal is priced at roughly 4.89x, which is aggressive for a project-based trade business with no contracted recurring revenue. The real estate is owned by the seller and valued at $1.4M but is explicitly not included in the asking price, with a current lease at $10,000/month. A buyer needs to underwrite both the durability of that fat margin and the true owner-operator dependence before paying near ask.

Why we like it

The vertically integrated model (fabrication plus installation) is the real story here. Owning the fabrication step means the business captures manufacturing margin rather than reselling someone else's product, which plausibly explains part of the 37.5% cash flow margin that would be impossible for a pure install crew.
This is a mature, 24-year operation with a diversified lead engine across referrals, internet leads, and preferred commercial client relationships. Longevity through multiple California construction cycles suggests durable demand and real brand equity in the region, not a startup riding a single channel.
The commercial client mix matters. Preferred commercial relationships tend to generate repeat project flow (property managers, HOAs, developers, municipalities) that is stickier and higher-ticket than one-off residential fence jobs, which supports revenue predictability even without formal contracts.
The setup rewards an operator who can install a sales function. Management runs the business with an experienced leadership team already in place, and the seller offers up to a full year of transition, meaning a buyer can inherit systems rather than rebuild them.

How to improve it

Hire a dedicated outbound sales rep in the first 90 days, exactly as the seller flags. The company currently grows on referrals and inbound internet leads with no proactive account development, so a single closer targeting property managers, GCs, and municipalities could add meaningful backlog without new fabrication capacity.
Build a maintenance and repair revenue line to add recurring cash. Fencing degrades from weather, vehicles, and vandalism, and offering annual inspection and repair agreements to the existing commercial client base would convert one-time installs into repeatable revenue and smooth the project-based cycle.
Formalize a preferred-vendor program with the largest commercial accounts. Lock in the existing preferred clients with volume pricing and priority scheduling so the relationships survive the ownership transition and cannot be poached during the handover window.
Pursue the branch expansion the listing identifies. The fabrication facility can supply product to additional install crews in surrounding territories, so opening a satellite install operation leverages existing manufacturing overhead across more revenue.
Tighten the internet lead funnel and measure cost per acquired job. If a large share of revenue comes from internet leads, small improvements in landing pages, response time, and quote-to-close rate drop straight to the bottom line given the high gross margin.
Negotiate a market-rate long-term lease on the seller-owned facility before close. At $10,000/month on a $1.4M building the implied yield is roughly 8.5%, so lock in terms and a purchase option to avoid rent shock and to preserve the option of buying the real estate later at a known price.

Diligence notes

Interrogate the 37.5% cash flow margin hard. A 37.5% SDE margin on a $6M trade business is far above typical fencing and construction comps, so reconcile the SDE bridge line by line and confirm that owner add-backs, the $10,000/month rent, subcontractor labor, and material costs are all properly captured and not understated.
Quantify owner dependence and customer concentration. The seller offering a full year of transition suggests the business may lean on the owner for sales, estimating, or key relationships, so pull revenue by customer and determine what share of jobs and margin rides on the owner personally.
Verify revenue mix between residential and commercial and one-time versus repeat. This is a project-based business with no contracted recurring revenue, so map the backlog, pipeline, and 3-year job history to understand how much revenue must be re-won each year and how lumpy it is.
Confirm the asset and inventory schedule. The sale includes $300k inventory, $500k FF&E, and rolling stock plus fabrication equipment, so verify condition, age, ownership (free and clear vs. financed), and whether any capex is deferred, since heavy field equipment can hide near-term replacement costs.
Stress-test the valuation against the California construction cycle. At ~4.89x SDE for a discretionary-leaning trade tied to new construction and remodeling, model a downturn scenario where commercial project volume drops and confirm the business still services acquisition debt at a defensible margin.
Review labor and licensing exposure. With 12 employees in California, confirm contractor licensing (CSLB), workers' comp experience mod, prevailing wage exposure on any public jobs, and whether key field leaders will stay post-close, since crew turnover directly caps install capacity.

Source

Originally listed on BizBuySell. View original listing →