Commercial & Residential Plumbing Contractor, 30-Year Illinois & Missouri Operation

$13.0M

Revenue

$2.4M

SDE

4.2x

Multiple

Subscribe Free

Read the full deal writeup

Get Free Access

Already a member? Sign in

Full Editorial Writeup

This is a well-established plumbing contractor serving the St. Louis Metro and Metro East markets since the early 1990s. The company runs a diversified book of work across commercial, multi-family, and residential segments, with revenue spread across new construction, remodeling, repairs, and recurring service work. Licensed in both Illinois and Missouri and staffed by a union workforce, it holds long-standing relationships with leading builders and general contractors in its region.

At roughly $13M in revenue and $2.37M in cash flow, the business is running an 18% owner-earnings margin, which is healthy for a labor-intensive trades operation carrying union labor costs. The mix of project work and ongoing service creates a base of repeat and referral-driven business rather than pure one-off bidding. Certification as a woman-owned business is a meaningful differentiator on public and institutional bids where diversity supplier requirements apply.

The asking price of $10M against $2.37M in cash flow implies a 4.21x multiple, which sits at the upper end for a regional trades contractor and will need to be tested against the durability and transferability of that earnings stream. The setup is a classic essential-services roll-up target: fragmented, recession-resistant demand, licensed and bonded, with a real brand in a defined geography.

Why we like it

Earnings quality is strong for the trade, with $2.37M of cash flow on $13M of revenue for an 18% margin, well above the thin margins typical of new-construction-heavy plumbing shops. The service and repair mix cushions the cyclicality of construction work and produces recurring, referral-driven volume.
Plumbing is about as durable as demand gets, because water systems fail and code work is mandatory regardless of the economy. A three-decade brand with established builder relationships and dual-state licensing (Illinois and Missouri) is not something a new entrant replicates quickly.
The woman-owned certification is a genuine commercial moat on institutional, municipal, and large-GC bids that carry diversity supplier requirements. That designation can steer work to this firm that competitors literally cannot access, though a buyer must confirm it survives a change of ownership.
Diversification across commercial, multi-family, and residential across new construction, remodel, repair, and service means no single revenue stream can sink the business. That balance is exactly what you want in a downturn-resistant trades operation.
A union workforce with an experienced team lowers the key-man risk that plagues most trades acquisitions. The systems and licensing are already in place, so the buyer inherits an operating machine rather than a founder-dependent job.

How to improve it

Segment the P&L by revenue line to identify which work (service, commercial new construction, multi-family, residential) actually drives the margin. Reweight bidding and crew allocation toward the highest-margin recurring service work and away from low-margin competitive new-construction bids.
Build or formalize a maintenance service contract program for commercial and multi-family property owners. Converting one-off repair calls into recurring monthly or annual agreements smooths revenue and raises the eventual exit multiple.
Institutionalize the woman-owned certification as a sales asset by systematically targeting public sector, hospital, university, and large-GC bids with diversity supplier mandates. This is under-monetized channel access that competitors cannot copy.
Add or upgrade field service management software to tie dispatch, job costing, and invoicing together. Tighter job costing on labor and materials directly protects the 18% margin against overruns on union labor.
Recruit and develop a second-tier operations leader if the current owner is central to bidding and customer relationships. Reducing owner dependence before close protects value and makes the earnings transferable.
Push disciplined price increases on service and repair work, where customers are less price-sensitive than on bid work. Even modest rate increases on non-competitive work flow almost entirely to the bottom line.
Evaluate bolt-on acquisitions of smaller local plumbing shops to absorb their service books and crews. The dual-state license, brand, and back office make this an ideal platform for a regional trades roll-up.

Diligence notes

Confirm whether the woman-owned business certification transfers or must be re-earned under new ownership, and quantify how much revenue is tied to bids requiring that designation. If a male or non-certified buyer loses this status, a portion of the pipeline may evaporate.
Break down revenue by new construction versus service and repair, and by customer concentration. Heavy exposure to a few builders or GCs, or a construction-weighted book, materially raises the risk profile against the 4.21x asking multiple.
Scrutinize the union labor agreements, pension and multiemployer plan obligations, and any withdrawal liability. Unfunded multiemployer pension exposure is a classic hidden liability in union trades businesses that can dwarf the purchase price if mishandled.
Verify the cash flow figure with clean books, add-back detail, and how owner compensation is treated. Confirm the margin is sustainable and not inflated by a boom in construction activity or one-time large projects.
Confirm all Illinois and Missouri licenses, bonding capacity, and insurance are current and transferable, along with the status of work-in-progress and the backlog. A buyer needs to know the pipeline is real and contracted, not aspirational.

Source

Originally listed on BusinessBroker.net. View original listing →