Valuing a roofing business correctly is an integral first step when you are thinking about whether or not it is a good time to sell.
Although the valuation of a roofing company is not difficult to calculate, the ramifications are far-reaching. There are two major elements to consider with a roofing valuation: cash flow, and the specific multiple of the cash flow that the prospective buyer is willing to pay. If you want to know “How much is my roofing business worth,” digging into the cash flow and the multiples will get you your answer.
When taking stock of your roofing business, cash flow is king. Of course there are many variables that are part of the roofing business valuation, but at the end of the day, your cash flow is the most important matter. You will want to understand the SDE (Seller’s Discretionary Earnings), add-backs, EBITDA and the adjusted EBITDA, but keep your eyes focused on the cash flow to find out all you need to know about how to value a roofing business. Some owners worry about tax liabilities or other variables, but the cash flow is hands-down the most important element.
Multiply the free cash flow by the multiples to determine your roofing valuation.
Take it one step further to consider a few more important elements. T
he prospective buyer will want to purchase anything needed to run the business, such as your trucks and equipment.
Also, the sale will be conducted debt free, which means you need to have the company in the clear before it is sold. You will also need to establish an agreed upon amount of capital in the business before you close. And don’t forget that fees will definitely eat up some of your profits. Expect to net 70-75% of the sale price.
The valuation of your roofing company is based on cash flow. But in order to have time to manage your business’s cash flow, you need some help with making a sale. Brentwood Growth has the experience and expertise to show you your roofing business worth, and to find a buyer who is willing to pay out the full value of your business.
Contact us today to experience our seller side loyalty and see the wide array of investors that are interested in a roofing business like yours.