Value my roofing company worth

Tampa Bay Roofing Company for Sale - By Legacy Venture Group - 88390416 - Call Brian Stephens

Based on SOLD TRANSACTIONS SUMMARY FOR ROOFING COMPANIES

Statistic Transactions Min Max Mean Median Variation
Sales Price 8 $450,000 $4,500,000 $1,925,000 $1,650,000 N/A
Annual Gross Revenue 8 $2,500,000 $8,000,000 $5,000,000 $4,500,000 N/A
Seller’s Disc. Earnings (SDE) 8 $325,000 $1,400,000 $700,000 $650,000 N/A
EBITDA 8 $250,000 $1,300,000 $600,000 $550,000 N/A
SDE % of Revenue 8 8.00% 30.00% 15.00% 12.50% 0.50
EBITDA % of Revenue 8 6.00% 22.00% 12.00% 10.00% 0.53
Multiple of Revenue 8 0.20 0.90 0.40 0.35 0.60
Multiple of SDE 8 1.70 3.20 2.60 2.50 0.20
Multiple of EBITDA 8 2.00 4.00 3.10 3.20 0.25

Analyzing Valuation Metrics for Roofing Companies

When evaluating a roofing company, several key metrics provide insights into its potential market value. Calculating and interpreting SDE, EBITDA, and the appropriate industry multiples can help establish a realistic value for a business. Remember, however, that these figures serve as guidelines. Two roofing companies with similar financials can have different valuations based on factors like market position, customer loyalty, and operational efficiency.

1. Sales Price

  • The range of sales prices for roofing companies varies from a minimum of $450,000 to a maximum of $4,500,000, with an average (mean) price of $1,925,000 and a median of $1,650,000.
  • These values indicate that while some roofing businesses sell at lower prices, others can command significantly higher values based on their financial performance and market presence.

2. Annual Gross Revenue

  • Roofing companies in this dataset show annual revenues ranging from $2,500,000 to $8,000,000, with a mean revenue of $5,000,000 and a median of $4,500,000.
  • Revenue is a critical factor in valuing roofing businesses since it reflects the company’s capacity to generate sales in a highly competitive industry.

3. Seller’s Discretionary Earnings (SDE)

  • The SDE, which represents the owner’s total benefit from the business, ranges between $325,000 and $1,400,000, with an average of $700,000 and a median of $650,000.
  • SDE is particularly useful in assessing smaller roofing companies where the owner is heavily involved in operations.

4. EBITDA

  • EBITDA values range from $250,000 to $1,300,000, with a mean of $600,000 and a median of $550,000. This metric is often preferred for larger businesses or when the potential buyer is an investor rather than an owner-operator.
  • EBITDA allows prospective buyers to assess profitability while assuming the business could be run by a professional manager.

Percentage Ratios

The SDE and EBITDA percentages of revenue provide further insights into a roofing company’s profitability relative to its sales.

5. SDE % of Revenue

  • The SDE percentage of revenue ranges from 8.00% to 30.00%, with an average of 15.00% and a median of 12.50%.
  • This percentage helps assess how much of the business’s revenue translates to discretionary earnings for the owner, giving an idea of the business’s cash flow quality.

6. EBITDA % of Revenue

  • EBITDA as a percentage of revenue ranges from 6.00% to 22.00%, with an average of 12.00% and a median of 10.00%.
  • This metric offers insights into operational efficiency and profitability, making it particularly useful for benchmarking against other roofing businesses.

Multiples for Valuation

Industry multiples help estimate a roofing company’s value based on revenue, SDE, and EBITDA.

7. Multiple of Revenue

  • The revenue multiple varies from 0.20 to 0.90, with a mean of 0.40 and a median of 0.35.
  • Multiplying a company’s revenue by these multiples provides an initial valuation range. For example, if a roofing company generates $5,000,000 in revenue, the valuation range based on revenue multiple would be:
    • Low end: $5,000,000 × 0.20 = $1,000,000
    • High end: $5,000,000 × 0.90 = $4,500,000

8. Multiple of SDE

  • The SDE multiple ranges from 1.70 to 3.20, with an average of 2.60 and a median of 2.50.
  • Using SDE as a valuation basis is especially relevant for owner-operated businesses. For a roofing business with an SDE of $700,000, the valuation would range as follows:
    • Low end: $700,000 × 1.70 = $1,190,000
    • High end: $700,000 × 3.20 = $2,240,000

9. Multiple of EBITDA

  • The EBITDA multiple ranges from 2.00 to 4.00, with an average of 3.10 and a median of 3.20.
  • For roofing companies with substantial EBITDA, this multiple provides a useful estimate. A business with an EBITDA of $600,000 could have the following valuation range:
    • Low end: $600,000 × 2.00 = $1,200,000
    • High end: $600,000 × 4.00 = $2,400,000

Key Takeaways for Roofing Company Valuation

  1. Use Multiple Metrics for Accuracy: While revenue multiples provide a quick estimate, combining SDE and EBITDA multiples offers a fuller picture.
  2. SDE vs. EBITDA: If the owner is heavily involved in the roofing business’s day-to-day operations, the SDE multiple might be more relevant. For larger, manager-run businesses, the EBITDA multiple is often more appropriate.
  3. Professional Valuation: Since two seemingly similar businesses can have different valuations based on market position, customer loyalty, and efficiency, it’s essential to get a professional valuation from an experienced business broker to understand the specific drivers of value.

A professional valuation by a Tampa business broker like Legacy Venture Group can help roofing business owners understand these figures and make informed decisions about when and how to sell.

Business Value Score: https://score.valuebuildersystem.com/legacy-venture-group/brian-stephens

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