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Build It To Sell It Growth

The Real Numbers Behind Selling a Roofing Company to PE!

📅 April 13, 2026 ⏱️ 1:05:44 🎤 Lance Bachmann, Claudio Vill

Chapters

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  • 0:00
    Understanding Business Valuation
    The discussion begins with contrasting how owners perceive company value versus how buyers, particularly private equity firms, assess it, emphasizing the difference between assets and liabilities.
  • 1:45
    Specialization in Business Brokerage
    Claudio explains his shift from general business brokerage to specializing solely in the roofing industry, emphasizing the benefits of niche focus and building strong industry networks.
  • 5:05
    The 'Sniff Test' for PE Firms
    Lance and Claudio discuss the rigorous evaluation process private equity firms employ, highlighting that most businesses don't pass the initial 'sniff test' due to various factors beyond just P&L.
  • 7:44
    The Pitfalls of Search Funds
    The hosts caution against search funds, explaining how they often secure an offer before finding financing, potentially leaving sellers in a vulnerable position.
  • 10:46
    The Importance of M&A Advisors
    Lance shares his personal experience of regretting not using an M&A advisor for early sales, emphasizing how professionals mitigate stress, manage emotions, and navigate complex deal terms.
  • 12:25
    Multipliers and Market Trends
    The conversation shifts to current market trends for roofing company multipliers, noting a general stabilization or slight decrease, with thresholds at which multipliers significantly change.
  • 14:01
    Add-backs and Negative Adjustments
    The hosts discuss 'add-backs,' explaining how certain owner expenses can be added back to EBITDA but also how owner compensation for roles they'll vacate can become negative adjustments.
  • 18:56
    LOI Leverage and Negotiation
    A crucial insight is shared about the seller's peak leverage being right before signing the Letter of Intent (LOI) and the importance of negotiating key terms prior to exclusivity.
  • 21:25
    Minimizing Deal Killers
    Lance and Claudio identify the primary deal killers: time, re-trading of numbers, and legal issues, stressing the need for efficient processes and experienced M&A counsel.
  • 23:11
    The Pros and Cons of Earnouts
    The episode concludes with a discussion on earnouts, with both hosts expressing a preference for rollovers due to the risks and lack of control associated with earnout structures.

Speakers

L
Lance Bachmann
Host
C
Claudio Vill
the roofing biz broker

Key Takeaways

✦

Focus on building a niche expertise within home services, as specialization leads to better networks and efficiency in sales.

✦

Understand that Private Equity (PE) firms prioritize efficiency and profitability, not just assets. Trucks, for example, can be liabilities due to maintenance and replacement costs, impacting valuation negatively.

✦

Prepare for a rigorous 'sniff test' and due diligence process from PE firms; having a strong leadership team and operational systems that function without the owner are crucial.

✦

Invest in a sell-side Quality of Earnings (QoE) report to preemptively address financial discrepancies and strengthen your negotiation position, avoiding last-minute re-trades.

✦

Engage a specialized M&A advisor or broker. Their expertise protects your interests, manages emotional stress, and levels the playing field against experienced buyers with large teams.

✦

Negotiate all critical terms, including earnouts, non-competes, and payment structures, before signing a Letter of Intent (LOI) to maximize your leverage and avoid unfavorable conditions.

✦

Recognize that multipliers are dynamic and generally declining. Your business's value today might differ significantly from a few years ago, so set realistic expectations based on current market conditions.

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