Established Multifamily Flooring Contractor, 40-Year Southern California Business

$6.1M

Revenue

$1.1M

SDE

3.2x

Multiple

Subscribe Free

Read the full deal writeup

Get Free Access

Already a member? Sign in

Full Editorial Writeup

This is a 40-year-old flooring supply and installation company serving multifamily apartment communities across Southern California, based in Orange County. Roughly 95% of revenue comes from turn flooring, the work of replacing carpet and hard-surface flooring between tenant move-outs and move-ins for property management companies. That single fact is the whole thesis: turn flooring is non-discretionary, high-frequency, and tied to apartment tenant churn rather than the housing cycle. Every time a renter vacates, the unit needs to be made ready, and flooring is one of the first line items on the turn list.

The company has built deep relationships with major property management firms and is a trusted vendor for both turn work and common area improvement projects. It runs on a 15-person team including three managers with over 20 years of combined tenure, holds all required state contractor licenses, and has been compounding at roughly 20% per year with what the seller describes as only minor growing pains. The differentiator is boring and durable: reliable scheduling, honest client communication, and tight quality control, which matters enormously in a business where property managers need units turned fast and predictably.

At $3.5M against $1.08M of cash flow, the deal is priced at 3.24x SDE. The building is owned by the seller and leased back to the business at near fair market rent of $14,000 per month, so real estate is not part of this transaction. Revenue concentration among a handful of large property management accounts is the central question, but the recurring, essential nature of turn flooring and the seasoned management team make this an attractive operator or lightly-involved owner acquisition.

Why we like it

Earnings quality is strong for a trades business: $1.08M cash flow on $6.1M revenue is a healthy 17.7% margin, and the 3.24x multiple is reasonable for a 40-year-old company with a management team in place. The seller owns the building but leases it back at near fair market rent, so the cash flow figure is not artificially propped up by below-market occupancy costs.
Turn flooring is one of the most durable revenue streams in the trades. Apartments turn over regardless of the economy, and flooring is a mandatory make-ready expense for property managers, which means the demand is tied to tenant churn rather than new construction or discretionary remodeling spend. That 95% turn concentration is a feature, not a bug, for downside protection.
The customer relationships behave like recurring revenue even without formal contracts. Property management firms are repeat buyers who route steady, predictable turn work to trusted vendors, and this company has decades of deep relationships with major regional players. Once you are the reliable vendor on a portfolio, you keep getting called on every vacancy.
A new owner inherits real operating advantage: three managers with 20-plus years of combined tenure expected to stay, all required contractor licenses, and 20% annual organic growth achieved with minimal effort. The seller frames the growth ceiling as capital and capacity, not demand, which is exactly the constraint a well-funded buyer can relieve.

How to improve it

Map account concentration in the first 30 days and lock in the top property management relationships with master service agreements or preferred-vendor terms. Converting informal repeat business into documented multi-property agreements both de-risks the revenue and materially raises the exit multiple for the next buyer.
Attack the stated growth constraint of capacity by adding crews and a second dispatch coordinator. If demand is truly limited by operational throughput and the business is already growing 20% annually, funding two or three additional installation crews should convert directly into revenue with known unit economics.
Expand geographically into neighboring counties where the same property management companies already own units. Cross-selling turn flooring to a national or regional PM firm's other portfolios is far cheaper than winning net-new logos, since you are extending trust that already exists.
Push into the higher-margin common area and commercial/retail flooring segments the seller flagged. Turn work is volume-driven and price-sensitive, while common area renovations and commercial projects carry larger tickets and can smooth revenue across the year.
Tighten materials procurement given 95% of revenue runs through flooring supply. At $6M in revenue, even a two-to-three point improvement in material cost through direct manufacturer buying or volume rebates flows straight to the bottom line and compounds as volume grows.
Install job-level margin tracking and a simple CRM if not already present. Understanding profitability per property, per PM account, and per crew lets you fire unprofitable work and double down on the accounts that actually drive the $1.08M in cash flow.
Negotiate the building lease terms upfront as part of the deal. Since the seller owns the property and is retiring, secure a long-term lease with a purchase option or renewal caps so occupancy costs stay predictable and you are not exposed to a future landlord you do not control.

Diligence notes

Quantify customer concentration immediately. With 95% of revenue from turn flooring and deep ties to a few major PM firms, the loss of one or two anchor accounts could gut the business, so demand a customer-level revenue breakdown for the last three years and check whether relationships are institutional or personal to the seller.
Verify the 20% annual growth and the $1.08M cash flow against tax returns and bank statements. Trades businesses often carry owner add-backs and cash timing quirks, so reconcile the SDE build, confirm the near fair market rent assumption is real, and ensure the FF&E of $120,000 supports current volume.
Confirm the management team's intent to stay and the license structure. The value here rests heavily on three long-tenured managers and state contractor licenses that may be tied to a qualifying individual, so verify whether the licenses transfer or require a licensed party to remain on staff post-close.
Assess labor exposure given the mix of 12 full-time employees, 1 part-time, and 2 contractors. Review worker classification for the contractors, prevailing wage or union exposure on any common area work, and workers comp history, since installation labor is the primary cost and the primary liability in this business.
Nail down the real estate arrangement. The seller owns the building and is retiring, so clarify whether the property is offered separately, what the go-forward lease will look like, and whether the $14,000 monthly rent is genuinely at market or understated in a way that flatters the cash flow.

Source

Originally listed on BizBuySell. View original listing →