What’s Your Florida Roofing Company Worth? Valuation Secrets & Buyer Expectations

As an owner of a Florida roofing business, you’ve weathered storms both figuratively and literally over the years. You’ve built equity in your business through hard work and determination, but now you want the most profitable exit possible. Whether it’s for retirement or to start an entirely new business venture, getting top dollar for your Florida roofing business is essential.

Unfortunately, many business owners leave substantial money on the table by not properly valuing their business before the sale. This may help you get a quick sale as savvy buyers detect the great deal, but you end up with less money in your pocket than you deserve.

In this guide, we’ll cover the secrets of roofing business valuations so you can price your roofing business correctly while still attracting top buyers willing to pay a premium.

How Is a Roofing Company Valued in Florida?

There are three main approaches to valuing a roofing business in Florida. They include an asset valuation approach, income approach, and market-comparison approach.

Asset Valuation

The asset-based method focuses on your company’s tangible assets, including equipment, vehicles, inventory, and real estate. Any outstanding debt is then subtracted from these values.

While assets are important, solely relying on this method for your base valuation will generally undervalue a roofing company. As a local service business, brand recognition and customer contracts can significantly increase the value of the business above the hard asset value.

Income Valuation

Income valuation looks at the business’s cash flow so that the buyer can determine what type of revenue and profit they can expect after taking over. Commonly, a calculation of the Seller’s Discretionary Earnings (SDE) is used for smaller businesses. This metric adds back the owner’s salary, personal benefits, and other discretionary or one-time expenses to show the true financial benefit available to a single owner-operator. For larger roofing companies, buyers typically use Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) instead.

These calculations can be optimized before a sale to make the business more attractive and help show its true value.

Market Comparison Approach

Similar to real estate valuations, market comparisons look at similar roofing company sales in the Southeast region. These will then be averaged to account for fluctuations and will create a baseline for valuations.

Most situations will require a combination of these three methods to come to an accurate baseline valuation of the roofing business. Knowing where to put the most weighting is key to valuing your business correctly.

Buyer Expectations: What Are They Looking for?

Savvy buyers willing to make a strong offer will be looking at several factors when evaluating your roofing business. Being able to showcase these areas can increase your asking price.

Income Diversity and Stability

Buyers are looking for stable, recurring income that doesn’t have major seasonal fluctuations. Florida home service businesses like roofing can have strong revenue after a storm or summer seasons, but if revenue drops off too much the rest of the year, it’s a red flag for buyers.

Operational Documentation and Standardized Workflows

New owners want to know they can immediately take over with minimal disruption in operations. This means your systems are standardized and well-documented. This includes the use of customer relationship management (CRM) software, standardized accounting software, and up-to-date employee training and certifications. If the current owner’s knowledge and input are the only things holding the business together, that reduces the value to a potential buyer.

Strong Branding in Your Regional Florida Marketplace

Your presence online and within the market is a significant factor that buyers will consider. This can include your search position for local roofing searches on Google or other platforms. Name recognition can also be a factor if you’ve recently invested in local radio, television, or other media.

The key to valuing your roofing company accurately is to optimize and document each of these areas so a buyer immediately understands what your business is offering through a sale.

Market Trends Impacting the Value of Your Roofing Company

Several market trends are affecting roofing businesses in Florida. To start, many investment firms are looking at local service businesses as a way to strengthen their portfolio. These companies are paying top dollar, but they want turnkey businesses that offer a smooth transition after the sale.

Florida continues to attract new residents, causing the population to grow faster than surrounding states. This makes for a strong market, but also attracts new competitors.

Labor is also an important consideration in today’s market. Virtually every industry is dealing with labor shortages and the risk of high turnover. If you can demonstrate a loyal workforce with low turnover, that’s always attractive to buyers.

Finally, changes in insurance industry practices and reduced coverage for disaster-prone areas can impact roofing companies that rely on storm damage repair or replacement as their main revenue stream.

Step-by-Step Guide to Valuing Your Roofing Company

To put all of this information into practice, you’ll want to follow a logical plan to make your roofing business as attractive as possible.

Step 1: Collect and organize your financial records. This includes tax returns, profit and loss statements, and other relevant documents for the past 3-5 years. This sets the foundation for creating your valuation.

Step 2: Adjust for the owner’s salary, benefits, and one-time expenses to calculate SDE for smaller businesses. Larger businesses will use Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA).

Step 3: Document your customer base to illustrate the strengths of your business in the marketplace. Areas such as brand recognition, Google search ranking, and service contracts should all be formally documented and easy to understand for the buyer.

Step 4: Consider the market conditions and whether you want to time your sale to coincide with strong seasonal performance or another event that can boost the value of the business.

Step 5: Contact a qualified business broker. An experienced business broker has not only worked with roofing company sales in the past, but they’ve also worked with buyers. They know what top buyers are looking for, and they can help you optimize your business to command a top price.

The Role of Financials in the Valuation Process

When business owners consider an exit or a sale, they usually think of the financials of the business first. While the role of finances in the valuation process does create a foundation, it’s not the whole story.

Many buyers also put a premium on intangibles or market-related indicators, such as operational documentation, employee loyalty, competition, and brand recognition in the market.

Business owners who know how to showcase these less tangible qualities can significantly boost the value of their business to potential buyers.

Seeking Expert Advice When Selling a Roofing Business

There’s nothing easy about building a successful roofing business in Florida. It takes dedication, craftsmanship, and long hours that sometimes go unnoticed in those early days.

But when it comes to selling a business for top dollar, business owners often need a little guidance.

Buehler Business Brokers has helped countless business owners maximize their exit to achieve their retirement goals or start a new venture.
Contact Buehler Business Brokers today and speak with one of our valuation experts. We can help you showcase your business so you command the best offer in the Florida market.