Established Roofing Contractor, 50-Year Residential & Commercial

$5.0M

Revenue

$500K

SDE

1.6x

Multiple

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Full Editorial Writeup

This is a 50-plus year old roofing contractor serving both residential and commercial customers across an established regional footprint. The company does roughly $5 million in annual revenue with about $500,000 in cash flow, runs on 21 employees including installation crews, supervisors, and office staff, and owns a working package of crew trucks, high-lift trucks, dumpsters, and roofing equipment. Five decades in business has produced long-standing customer relationships and meaningful repeat work, which is the real asset in a trade where reputation and referral drive the pipeline.

The deal is priced at $800,000, a 1.6x cash flow multiple, which is cheap for a half-century-old trades business even accounting for the usual roofing risks around weather, crew dependency, and project lumpiness. One owner is retiring while a younger co-owner is willing to stay on, which de-risks the transition in a business where relationships with commercial accounts and crew leadership matter enormously.

The business operates from leased premises, with associated 3 to 4 acres of real estate available separately and not baked into the asking price. That means a buyer can control occupancy cost structure and potentially acquire the land on favorable terms, or keep leasing and conserve capital. The equipment package of trucks and lifts carries real value and is included, which is a chunk of the $800,000 price.

Why we like it

At $800,000 for $500,000 of cash flow, this is a 1.6x multiple on a business with 50 years of operating history, which is a low entry price with real downside protection. The equipment package alone (crew trucks, high-lift trucks, dumpsters) likely covers a meaningful portion of the asking price, so the goodwill and cash flow come cheap.
Roofing is a need-not-want service: water intrusion, storm damage, and failed roofs get fixed in any economy, and insurance often funds the job. Fifty years of reputation, referrals, and repeat commercial relationships form a durable moat that a new entrant cannot replicate quickly in a trust-driven trade.
Both residential and commercial demand is supported by an aging housing stock, rising replacement cycles, and insurance-driven storm work. A strategic acquirer with an existing construction or roofing operation can layer on synergies in purchasing, crews, and overhead.
The retiring owner is paired with a younger co-owner willing to stay, which solves the single biggest risk in trades acquisitions: losing the relationships and crew knowledge on day one. An owner-operator or an existing contractor can step in with built-in continuity and an experienced 21-person team already in place.

How to improve it

Pin down the residential versus commercial revenue mix and chase the higher-margin, more predictable commercial re-roof and maintenance work. Commercial accounts can be converted into recurring inspection and maintenance agreements that smooth out the seasonal and weather-driven lumpiness of pure installation work.
Build a formal maintenance and inspection program billed on an annual contract to create recurring revenue where today there is almost none. Even converting a slice of the existing 50-year customer base into service plans adds predictable cash flow and raises the exit multiple.
Implement job-costing and crew productivity tracking if it is not already tight, since roofing margins live and die on labor efficiency and material waste. A 10 percent cash flow has room to improve with disciplined estimating, change-order capture, and crew utilization metrics.
Invest in digital lead generation, Google reviews, and a modern website to capture insurance and storm-driven demand the business may be under-harvesting after decades of relying on word of mouth. Roofing demand is often won by whoever answers the phone fastest after a storm.
Negotiate to acquire or lock a long-term lease on the 3 to 4 acres of associated real estate on favorable terms, controlling occupancy cost and preventing a landlord from capturing value. If the real estate price is reasonable, owning it adds a tangible asset and stabilizes a key operational site.
Formalize a succession plan for the staying co-owner and key crew supervisors with retention incentives, because the relationships and field leadership are the real asset. Lock in the knowledge transfer before the retiring owner fully exits.

Diligence notes

Reconcile the stated $5M revenue and $500K cash flow against tax returns and bank statements, and understand how dependent earnings are on the two owners' own labor and selling. A single-owner-driven sales pipeline in roofing can collapse post-sale if the relationships walk.
Scrutinize revenue concentration across commercial accounts and any dependence on storm years or large one-off projects. Roofing revenue is inherently lumpy, so pull three to five years of history to understand the real normalized earnings versus a peak year.
Verify the condition, age, and ownership status of the crew trucks, high-lift trucks, and equipment, and whether anything is leased or financed. Deferred capex on a tired fleet could quickly erode the attractive entry multiple.
Review workers' comp history, safety record, licensing, bonding, and insurance, since roofing carries high injury and liability exposure that can materially affect premiums and insurability. Confirm all required contractor licenses transfer cleanly to a new owner.
Clarify the economics of the separately available real estate: price, acreage, condition, and whether a long-term lease is secured if you do not buy it. Also confirm the terms and amount of the offered seller financing to structure the deal with minimal cash at risk.

Source

Originally listed on BizBuySell. View original listing →