Jan 6th (Mon) 8PM NY

Deal Alert: 35-Year-Old Roofing & Light Construction Business in the U.S.

📍 Location: U.S. market, recently expanding into California – a high-demand region for roofing and construction services.
💰 Valuation: Seller’s Discretionary Earnings (SDE) of $1.23M on $11.7M revenue (2023), with $3.5M in facilities and extensive fleet/equipment included.
📊 Revenue Streams: Strong mix of commercial (65%) and residential (25%) clients, diversified through both roofing and light construction services.

🌟 Why This Business is Great:

Steady Growth in a Booming Market:
This isn’t just a roofing business—it’s a growth machine. With 25% average annual revenue growth over the last 4 years, it’s outperforming the industry’s average CAGR of 6.17%. By combining a 35-year legacy of quality with modern market strategies, this business is riding the U.S. construction boom.

Resilient Business Model:
The company thrives in both the commercial and residential sectors, ensuring a diverse customer base. Its recent expansion into California—arguably one of the most lucrative markets for construction—demonstrates its adaptability and hunger for growth.

Repeat Customers Drive Stability:
Customer loyalty is a cornerstone here. Referrals and repeat business dominate their sales funnel, making their revenue streams more predictable.

🚀 Growth Opportunities:

1️⃣ Expand Recurring Revenue Streams:
The current $8,800 in annual maintenance revenue is a drop in the bucket for a business this size. Scaling maintenance contracts with existing customers could lock in predictable cash flow and boost valuation multiples.

2️⃣ Optimize Operations for Margins:
While the business is profitable, there’s room to improve efficiency. Focusing on inventory turnover and reducing debt could unlock additional cash flow.

3️⃣ Capitalize on California Expansion:
The California market is a goldmine for this business. Targeted marketing efforts, such as local advertising, digital campaigns, and strategic partnerships, could solidify its presence in this high-demand region.

🔍 My Analysis: This 35-year-old roofing and light construction business is a solid acquisition opportunity for a buyer looking for steady growth and untapped potential. With $11.7M in revenue and $1.23M in SDE for 2023, it’s profitable and positioned for further expansion, especially with its recent entry into the California market. The included fleet, equipment, and facility add significant value, while the customer loyalty and diversified revenue streams provide stability. However, high customer concentration and a moderate debt-to-income ratio are factors to address. Scaling maintenance contracts, optimizing operations, and strengthening its presence in California could unlock significant growth. For a strategic buyer or private equity group, this is a rare chance to acquire a thriving, asset-rich business in a growing market.

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Jason completed 6 acquisitions in the construction space. More in the pipeline. [link]

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My Take

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