Multi-State Commercial Roofing Repair Co. | Near-Absentee
Full acquisition analysis: financials, market context, valuation, risk assessment, and 100-day integration plan.
View Original Listing ↗At a Glance
Established commercial roofing services company specializing in repair and service work for large commercial properties and educational institutions. Zero customer attrition with institutional anchor accounts. Near-absentee operation with remote admin structure and established 10-person field team. Home-based, fully relocatable. Listed at $4.85M (7.6x reconstructed SDE) against $2.73M revenue.
Key Strengths
- Zero customer attrition with institutional anchor accounts (schools, national commercial properties)
- Near-absentee operation requiring minimal owner involvement (HR and finance only)
- Emergency response capabilities and extended service hours create competitive moat
- Specialized expertise in challenging projects limits direct competition
- Home-based with no facility lease — fully relocatable, minimal fixed overhead
- Strong gross margin business (30% estimated) with recurring service revenue base
- Fragmented market in high-growth I-85 corridor (Jackson County +55% job growth 2017-2022)
Key Questions
- What is the actual customer concentration? Listing claims zero attrition but doesn't disclose Top 5 customer mix
- What drives the massive disconnect between $1.03M stated SDE and our $641K reconstruction? Hidden owner add-backs?
- Who are the specific institutional anchor accounts and what contract terms exist?
- What is the service territory footprint? 'Multi-state' claim unexplained with Jackson County base
- What is the backlog value and average project duration for commercial repair contracts?
- What equipment/vehicle fleet exists and what is its condition and replacement schedule?
- What licenses, certifications, and insurance policies transfer with the business?
- Why is EBITDA not disclosed despite professional broker representation?
- What is the actual revenue breakdown: routine service vs. emergency vs. large repair projects?
- What customer acquisition channels drive new institutional accounts?
- What percentage of revenue is under contract vs. one-time repair calls?
- How does the remote admin structure function across multiple states?
Reconstructed P&L
| Line Item | Amount | % Revenue | Benchmark |
|---|---|---|---|
| Revenue | $2,730,000 | 100.0% | Reported |
| COGS (Materials) | –$1,092,000 | 40.0% | Industry avg: 40.0% |
| Direct Labor | –$819,000 | 30.0% | Industry avg: 30.0% |
| Gross Profit | $819,000 | 30.0% | Calculated |
| Vehicle / Fleet | –$81,900 | 3.0% | Industry range: 2-5% |
| Insurance (GL, WC, Auto) | –$68,250 | 2.5% | Industry range: 2-4% |
| Office / Admin / Software | –$54,600 | 2.0% | Industry range: 1-3% |
| Marketing | –$27,300 | 1.0% | Industry range: 0.5-3% |
| Rent / Facilities | –$54,600 | 2.0% | Industry range: 1-4% |
| Other Overhead | –$40,950 | 1.5% | Industry range: 1-3% |
| Depreciation | –$10,920 | 0.4% | Industry range: 0.3-0.5% |
| Net Profit (before owner comp) | $481,480 | 17.6% | Calculated |
| Owner Salary Add-Back | $150,000 | 5.5% | Est. $2M-$5M revenue tier |
| Depreciation Add-Back | $10,920 | 0.4% | Non-cash expense |
| EBITDA (Est.) | $491,400 | 18.0% | Benchmark: 15–20% healthy |
| Estimated SDE | ~$641,400 | 23.5% |
SBA Financing Model
Estimated SDE of ~$641,400 can support SBA 7(a) debt service on a $4,845,000 acquisition. Assuming 10% down ($484,500) and a 10-year term at ~10.5% SBA rates, annual debt service is approximately $706,061. Estimated pre-tax income to owner: ~–$64,661+ after debt service.
Cash Flow Reality Check
Cash Conversion Cycle
Working Capital Recommendations
- Establish Seasonal Line of Credit: Secure $200K+ revolving LOC before Nov-Feb slow season to bridge 50-60% revenue drop. Draw down in Oct, repay May-Aug during 125-135% peak months. Prevents cash crisis and maintains field team through winter.
- Accelerate Institutional Contract Collections: Negotiate NET-30 payment terms with schools/commercial accounts vs. standard NET-45-60. Educational institutions often pay slower—implement deposit requirements for large projects. Reduces 40-day receivables cycle to 30 days, improving cash conversion by $75K+.
- Implement Winter Revenue Diversification: Develop preventive maintenance and inspection services marketed to institutional accounts for Nov-Feb scheduling. Interior work (roof access hatches, drainage, insulation inspections) less weather-dependent. Target 20% winter revenue increase to 60-65% index, reducing peak working capital need by $50K+.
- Optimize Material Inventory Management: Shift from bulk material purchasing to just-in-time supplier delivery during slow season. Reduces inventory carrying costs and frees up $40-60K working capital Nov-Feb. Negotiate extended NET-45 supplier terms to match 40-day customer collection cycle.
How Sticky Is the Revenue?
Customer Concentration (Est.)
Revenue Retention Estimate: 95%+ (based on 'zero customer attrition' claim and institutional anchor accounts)
Estimated percentage of revenue retained after an ownership transition, based on industry benchmarks and business characteristics.
Churn Risk Factors
What's This Business Worth?
| Method | Low | Mid | High |
|---|---|---|---|
| SDE Multiple (Market Comps) | $2,565,600 | $2,887,800 | $3,210,000 |
| EBITDA Multiple (Add-On Comps) | $1,965,600 | $2,702,700 | $3,439,800 |
| Revenue Multiple (0.9x-1.2x) | $2,457,000 | $2,866,500 | $3,276,000 |
Premium Factors
Discount Factors
Market & Comparable Transactions
Jackson County sits in the high-growth I-85 corridor northeast of Atlanta, with 55% job growth 2017-2022 (outpacing national by 51.6%). Population 80,640 (+6.24% since 2020), median income $85,012. Georgia roofing market is fragmented (top 3 firms control <6% of $100B market) and seeing active M&A consolidation. Roofing employment projected +6% through 2034, but 86% of firms report hiring difficulties. Georgia has no state roofing license requirement, but projects >$2,500 require contractor license. Commercial roofing repair/service businesses benefit from recurring revenue, but face seasonal revenue swings (50% index Jan/Feb vs. 135% Jun/Jul) and labor shortages.
| Comparable | Revenue | Multiple | Location |
|---|---|---|---|
| Skyline Roofing Partners acquired Dr. Roof (Atlanta, GA residential/commercial) as add-on to expand regional footprint | Not disclosed | 4-7x EBITDA (typical add-on) | Atlanta, GA |
| A to B Roofing Partners acquired Chandler Roofing (Statesboro, GA) as first multi-brand platform deal | Not disclosed | 4-7x EBITDA (add-on) | Statesboro, GA |
| TopBuild acquisition of Progressive Roofing (platform-quality commercial) | Platform-quality | 9.1x EBITDA | Southeast |
Bull Case
This is a rare near-absentee commercial roofing business with institutional customer stickiness (zero attrition) and emergency response capabilities that create switching costs. The 30% gross margin service model generates strong cash with minimal overhead (home-based, remote admin). Jackson County's I-85 corridor location offers +55% job growth and expanding commercial/educational facilities. Georgia's fragmented roofing market (top 3 = <6%) is consolidating with PE-backed platforms paying 4-9x EBITDA for quality add-ons. The business has specialized expertise in challenging projects, limiting direct competition. With proper customer concentration verification and working capital injection, this could be a strong platform for roll-up strategy in Southeast commercial roofing. Seller financing and 6-month transition reduce risk.
Bear Case
The $4.85M asking price (7.6x reconstructed SDE) is 50-80% above market comps, and SBA financing yields negative annual cash flow of -$65K. The massive gap between $1.03M stated SDE and $641K reconstruction raises serious red flags about financial transparency. No EBITDA disclosure despite broker representation suggests unfavorable owner add-backs. Institutional customer concentration risk is undisclosed — if top 3 accounts represent >40% of revenue, attrition of one creates catastrophic cash flow impact. Multi-state operations claim is unexplained, potentially creating licensing/regulatory complexity. Commercial roofing faces 86% hiring difficulty rates and severe skilled labor shortages. Equipment/fleet condition unknown — replacement could require $200K+ capital injection. Seasonal revenue swings (135% peak vs. 50% trough) demand $355K+ working capital that SBA model doesn't fund. Without dramatic price reduction and full financial transparency, this is a pass.
Who You're Up Against
| Company | Type | Est. Revenue | Threat Level |
|---|---|---|---|
| ProShield Roofing | Independent | $1.5M-$3M | Certified Master Elite GAF contractor serving Jackson County with professional credentials and manufacturer backing. High threat in competitive bid situations. |
| Hewatt Roofing | Independent | $800K-$1.5M | Established local operator in Hoschton area with track record. Moderate threat—lacks specialized emergency response capability but has local relationships. |
| Red Roofing & Gutters | Independent | $2M-$4M | Multi-county operator in Middle Georgia/I-20 corridor with platinum GAF certification. High threat if expanding into Jackson County institutional market. |
| TCP Construction & Metal Roofers | Independent | $500K-$1M | Jackson-based specialty metal roofing contractor. Moderate threat—niche focus limits overlap, but could compete on specialized institutional projects requiring metal work. |
Competitive Advantages
Moat Assessment
Moderate moat based on institutional customer switching costs and emergency response capability. Educational institutions and large commercial properties face high friction changing roofing contractors due to: (1) procurement/bidding process complexity, (2) need for facility-specific knowledge (roof layouts, access points, drainage systems), (3) insurance/bonding requirements, and (4) emergency response SLA dependencies. However, moat is vulnerable to competitive bidding requirements every 3-5 years and lacks hard barriers like patents, exclusive contracts, or regulatory licenses. Specialized expertise claim is difficult to verify—commercial roofing repair is not highly technical vs. new construction. Durability depends on maintaining customer relationships through ownership transition and preventing key employee departures.
Risk Scores & Due Diligence
Due Diligence Priorities
- 1. Financial Reconciliation (Critical): Demand 3 years tax returns, P&Ls, and detailed owner add-back schedule. Reconcile $1.03M stated SDE vs. $641K reconstruction. Identify all owner perks, one-time expenses, and non-recurring items. Calculate true EBITDA and verify gross margin assumptions.
- 2. Customer Concentration Analysis (Critical): Obtain full customer list with 3-year revenue history. Calculate Herfindahl index and Top 1/5/10 concentration. Interview top 5 accounts to assess satisfaction and contract terms. Verify 'zero attrition' claim with customer tenure data. Assess risk of institutional budget cuts.
- 3. Multi-State Operations Verification: Map actual service territory and revenue by state. Identify all required licenses, registrations, and permits. Assess transfer requirements and costs. Verify insurance coverage across all operating jurisdictions. Clarify 'multi-state' claim vs. Jackson County home base.
- 4. Equipment & Fleet Assessment: Inventory all vehicles, tools, safety equipment, and materials. Obtain independent appraisal of fleet value and condition. Review maintenance records and estimate replacement schedule/costs. Verify ownership vs. leased equipment. Calculate working capital needed for equipment replacement.
- 5. Labor & Management Evaluation: Interview all 10 employees (3 FT, 7 PT) and assess retention risk. Review compensation, benefits, and non-compete agreements. Verify field team certifications and safety training. Test remote admin structure functionality. Assess owner knowledge transfer requirements beyond stated 6-month transition.
- 6. Contract & Backlog Review: Review all institutional anchor account contracts for term, pricing, termination clauses, and change-of-control provisions. Quantify backlog by customer and project. Analyze revenue mix: recurring service contracts vs. emergency calls vs. large projects. Verify emergency response SLAs and pricing premiums.
- 7. Insurance & Liability Verification: Review general liability, workers' comp, auto, and umbrella policies. Assess claims history and loss runs. Verify coverage limits meet institutional customer requirements. Obtain post-acquisition premium quotes. Review safety record and OSHA compliance.
- 8. Competitive Positioning Assessment: Interview customers about competitive landscape and switching costs. Assess specialization claims vs. actual market differentiation. Map key competitors (ProShield, Hewatt, Red Roofing) and their institutional customer penetration. Verify emergency response capability as competitive moat.
What Needs to Transfer
Potential Deal Breakers
- Institutional anchor account contracts with non-transferable change-of-control clauses and no seller cooperation obtaining consent
- Poor safety record or open OSHA violations creating insurance insurability issues or premium spikes >50%
- Fleet in poor condition requiring immediate $50K+ replacement capital not funded by working capital
- Key field team members refuse to stay post-acquisition, destroying institutional customer relationships
100-Day Integration Playbook
- Negotiate 6-month seller transition agreement with defined milestones and remote support terms
- Secure $355K working capital facility (equipment line or seasonal LOC) to fund slow season cash needs
- Obtain multi-state license/permit applications and begin transfer process pre-close
- Interview and lock in key field team members with retention bonuses
- Shadow owner for 2-4 weeks pre-close on HR, finance, and institutional account management
- Personal visit to all institutional anchor accounts with seller introduction to ensure continuity
- Implement weekly financial reporting to track actual vs. reconstructed P&L assumptions
- Complete license/permit transfers and insurance policy assignments across all operating states
- Document all operational procedures, emergency response protocols, and customer service standards
- Assess field team performance and identify any skill gaps requiring hiring/training
- Renegotiate supplier agreements to improve 40% COGS margin through volume discounts
- Implement CRM and job management software to improve remote admin efficiency
- Expand emergency response marketing to capture additional institutional customers in I-85 corridor
- Cross-sell preventive maintenance contracts to existing repair-only customers
- Hire 1-2 additional field technicians to increase capacity during peak season (May-Aug)
- Acquire 1-2 smaller roofing companies in adjacent counties to expand service territory
- Develop shared services infrastructure (dispatch, admin, fleet management) to support multi-location operations
- Pursue PE-backed consolidator exit (4-7x EBITDA add-on multiple) once EBITDA exceeds $750K
- Expand into adjacent services (roof coatings, preventive maintenance, drone inspections) to increase wallet share
- Build institutional sales team to systematically pursue schools, hospitals, and commercial property managers across Georgia
Value Creation Waterfall (3-Year Outlook)
Our Verdict
Verdict: Conditional — Proceed to LOI
CONDITIONAL PASS at asking price. Strong business model with institutional customers and near-absentee structure, but $4.85M (7.6x SDE) is 50-80% overpriced vs. market comps. Recommend counteroffer at $2.8M-$3.2M (4.5-5.0x SDE) contingent on full financial transparency, customer concentration verification, and equipment appraisal. SBA financing doesn't work at current price (-$65K annual cash flow). Seller financing or equity rollover required above $3M. If seller provides clean financials proving $900K+ SDE with reasonable add-backs and Top 5 customers <35% of revenue, this becomes a BUY at 4.5-5.0x. Without price reduction and transparency, walk away — too many red flags for asking price.
Recommended Next Steps
- Submit LOI at $2.9M (4.5x reconstructed SDE) with 60-day due diligence period and seller financing of 20% at 6% over 5 years
- Request 3 years tax returns, detailed P&Ls, and complete owner add-back schedule within 7 days of LOI acceptance
- Demand customer list with 3-year revenue history by account and contract terms for top 10 customers
- Engage roofing industry consultant to assess equipment/fleet value, competitive positioning, and market opportunity
- Interview all institutional anchor accounts (with seller present) to verify satisfaction and assess change-of-control risk
- Obtain insurance quotes for all required coverage (GL, WC, auto, umbrella) across operating territories
- Map multi-state operations and identify all license/permit transfer requirements and costs
- Secure $400K working capital commitment (equipment line + seasonal LOC) before submitting LOI
Suggested Offer Structure
$2.9M (4.5x SDE) with $290K down (10%), $2.32M SBA 7(a) loan, $290K seller note at 6% over 5 years. Contingent on verification of <35% Top 5 customer concentration, $900K+ SDE with documented add-backs, and clean equipment appraisal. 90-day close with 6-month seller transition.
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Related Resources
Sources
BizBuySell Listing #2547987 · Reconstructed P&L using 40% COGS, 30% labor, industry benchmarks · Jackson County economic data (55% job growth 2017-2022, population 80,640) · Georgia roofing M&A comps: Skyline/Dr. Roof, A to B/Chandler, TopBuild/Progressive (9.1x) · Georgia AG guidance: no state roofing license required · $2,500+ projects require GA Residential-Basic or Light Commercial license · Roofing employment +6% projected through 2034, 86% of firms report hiring difficulties · Top 3 roofing firms control <6% of $100B market (fragmented consolidation opportunity) · Seasonal revenue patterns for commercial roofing (50% winter index, 135% summer peak) · SBA 7(a) terms: 10% down, 10-year amortization, 10.5% rate