Northeast South Dakota Roofing Contractor, Non-Storm-Chasing Operator

$4.8M

Revenue

$892K

SDE

2.1x

Multiple

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Full Editorial Writeup

This is an established roofing contractor serving the northeast region of South Dakota, doing roughly $4.8M in trailing-twelve-month revenue with a clean 13.2% net margin, which pencils out to $892K of owner cash flow. The business has grown consistently over the past three years, runs a crew of 12 full-time employees, and leans on established subcontractor relationships plus a trailer for field operations. There is no real estate in the deal, the facility is leased, and the physical asset base is light.

What separates this operation from a lot of roofing comps is the stated non-storm-chasing model. Storm-cycle roofers live and die by hail and wind events, which makes revenue lumpy and multiples volatile. A contractor generating consistent double-digit growth off replacement and re-roofing demand rather than chasing insurance claims across state lines is a more durable, more financeable cash flow, and it is the kind of boring, essential-service business that holds up when the economy softens.

The seller is retiring and willing to structure a handover, which matters in a trade business where relationships with subs, suppliers, and repeat referral sources carry real value. At a 2.13x multiple on $892K of cash flow, this is priced below the 2.5x to 3.5x range the listing itself cites for comparable non-storm-chasing roofers, which is either a genuine value gap or a signal that owner dependence and durability need a hard look in diligence.

Why we like it

Earnings quality is strong for a roofing deal: $892K of cash flow on $4.8M of revenue is a 13.2% net margin, well above the thin margins typical of storm-chasing roofers. The stated three-year consistent growth suggests this is not a one-year hail spike being sold at the top of a cycle.
The moat is the operating model, not just the brand. A non-storm-chasing roofer built on re-roofing and replacement demand, established subcontractor relationships, and standout online reviews produces steadier, more predictable revenue than claim-dependent competitors, which is exactly what makes the cash flow bankable.
Market tailwinds are real and durable. The listing cites a roughly $92B roofing industry growing near 5% annually on aging housing stock and rising severe weather, in a market so fragmented that the top players hold only 5 to 6% combined, leaving room for a regional operator to consolidate.
The price is favorable relative to comps. At 2.13x cash flow the deal is priced below the 2.5x to 3.5x SDE range the listing cites for comparable non-storm-chasing roofers, giving a disciplined buyer either a margin of safety or negotiating leverage if diligence surfaces owner dependence.

How to improve it

Systematize the sales and estimating function so the owner is not the rainmaker. In the first 90 days, map exactly where jobs originate and build a repeatable lead process across referrals, insurance channels, and online reviews so revenue does not walk out the door when the seller does.
Launch a maintenance and inspection program to add recurring revenue. Roofing is inherently transactional, but annual inspection agreements, gutter and repair service plans, and warranty follow-ups can create a returning revenue base and a warm pipeline for future replacement work.
Expand into neighboring markets and states as the listing suggests. With licensing established and identified expansion markets nearby, a buyer can add crews or bolt on a small competitor to grow the footprint beyond northeast South Dakota without reinventing the operating model.
Convert more of the subcontractor spend into in-house crews where volume justifies it. Heavy reliance on subs caps margin and control, so analyze which recurring work could be brought in-house to capture margin and improve scheduling reliability.
Tighten pricing and job-costing discipline. Install job-level gross margin tracking so every roof is measured against target, cut low-margin work, and use the data to raise prices on high-demand seasonal windows in a fragmented market with limited local competition.
Invest in digital lead generation and reputation management. The business already has standout reviews, so double down with local SEO, Google Business Profile optimization, and paid search to capture the growing replacement demand ahead of slower-moving fragmented competitors.
Formalize the crew and retention plan. With 12 full-time employees and a retiring owner, lock in key foremen with retention agreements and a clear compensation structure so the labor base that produces the cash flow stays intact through and after transition.

Diligence notes

Quantify owner dependence carefully. Determine how much of sales, estimating, customer relationships, and sub coordination runs through the seller personally, because a retiring owner who is also the primary rainmaker is the single biggest risk to the $892K cash flow surviving the sale.
Verify the non-storm-chasing claim and revenue mix. Pull three years of job-level records to confirm revenue is genuinely driven by replacement and re-roofing rather than concentrated hail or wind events, since storm-cycle dependence would make the earnings far more volatile than presented.
Scrutinize the cash flow bridge and margin. Confirm the $892K SDE and 13.2% net margin with tax returns and financials, and understand how much depends on subcontractor pricing that could shift, plus normalize for any owner add-backs and one-time items.
Assess customer and referral concentration. Identify whether revenue leans on a handful of builders, insurers, or referral partners, and review the durability of subcontractor relationships since the sub network is effectively the production capacity of the business.
Review licensing, insurance, warranty, and callback exposure. Confirm state and local licensing transfers cleanly, examine outstanding workmanship warranties and callback rates, and check bonding and insurance requirements needed to keep bidding work post-close.

Source

Originally listed on BizBuySell. View original listing →