The roofing industry has seen a steady increase in mergers and acquisitions (M&A) activity in recent years. As residential and commercial demand remains strong, investors are recognizing roofing companies as attractive, cash-generating businesses with room for scalability. Whether your goal is to retire, transition ownership, or secure growth capital, understanding how to position your business for a successful sale is essential. 

Why are buyers becoming more interested in roofing? 

Both strategic buyers and financial buyers have shown greater interest in roofing businesses over the last few years. Drivers include ongoing demand for re-roofing projects, steady maintenance revenue, and resilience across economic cycles. Companies with diversified customer bases and repeat service contracts often stand out as especially desirable targets. For consolidators, increased purchasing power through supplier and material cost savings is another key benefit of acquiring multiple roofing operations. 

Additionally, understanding your company’s revenue mix can significantly influence buyer interest and valuation. Investors often assess the breakout between retail and insurance work, commercial and residential projects, and new construction versus reroof or service jobs.  

Most buyers prefer minimal exposure to new construction, with the main revenue driver being reroof and service work. Insurance revenue is another common topic of discussion. Although retail revenue is preferred, depending on a company's geographic location, insurance work is often unavoidable.  

Lastly, it's important to know what a potential buyer values in a roofing company. Some buyers are looking for a pure play commercial or pure play residential company, while others are interested in both. It’s important to know you are talking to the right potential buyers to avoid undervaluing your Company due to misalignment of revenue focus.  

What Buyers Evaluate Before Making an Offer 

Before entering a deal, investors look beyond revenue alone. Key factors they assess include: 

Preparing Your Roofing Company for Buyer Consideration 

Preparation is one of the most effective ways to strengthen valuation and reduce transaction stress. Steps to consider include: 

• Transitioning to accrual-based financial statements for a more accurate reflection of business performance and to meet investor expectations. Buyers often require accrual reporting, especially when revenue recognition follows percentage-of-completion methods for commercial projects.  
• Normalizing EBITDA (earnings before interest, taxes, depreciation, and amortization) by adjusting for nonrecurring or owner-specific expenses. 
• Developing a capable management team that can operate independently of the owner is typically a key factor for a roofing company to be a fit for financial buyers.  
• Ensuring clarity around how revenue is generated and tracked across business segments (retail vs. insurance; commercial vs. residential; new construction vs. reroof vs. service and maintenance). This helps investors accurately evaluate growth potential and potential risk exposure. 

Early Advisor Involvement 

Bringing in experienced advisors early in the process can significantly improve your sales readiness. Advisors help identify gaps in financial reporting, operational weaknesses, or documentation issues before a buyer ever sees them. This proactive approach often strengthens valuation, reduces diligence friction, and shortens the overall timeline. Connecting with any advisor early on in the process also gives owners more time to make strategic adjustments that position the company more competitively in the market. 

Common Due Diligence Issues in Roofing Transactions 

Buyers conduct detailed reviews to confirm that reported performance aligns with actual results. In roofing, common diligence challenges often arise around: 

• Job revenue recognition and cost tracking: Ensuring projects are recognized in the correct period. Especially in commercial roofing, accurate percentage-of-completion reporting is critical to reflect work performed and earned profit. Misalignment here can lead to valuation disputes or delayed closings. 
• Rebate and commission accounting: Clear documentation of the timing of recognition and calculation is essential. 
• CRM and reporting limitations: Incomplete or inconsistent data can delay or complicate the due diligence process.
  
  

Understanding Working Capital Targets 

Working capital, typically defined as current assets minus current liabilities, plays a major role in deal structuring. Buyers expect a “normalized” level of working capital to keep the business running post-closing. Roofing companies often experience cash timing differences due to retainage, deposits, or progress billing, making a cash-to-accrual analysis critical in setting fair targets and avoiding last-minute valuation adjustments. 

Strengthen Your Sale Strategy with Lutz M&A 

Navigating the sale of a roofing business involves more than finding the right buyer; it requires careful preparation, accurate valuation, and strategic deal execution. Lutz’s M&A Solutions help business owners to plan, prepare, and execute successful exit strategies. Contact us to learn how we can help guide your roofing company through every step of the transaction. 

• Futuristic, Achiever, Relator, Analytical, Belief

Aimee Werner

M&A Director

Aimee Werner, M&A Director at Lutz, began her career in 2014. Since joining the firm as an intern, she has steadily advanced through progressive roles to her current leadership position, developing extensive expertise in mergers and acquisitions along the way. 

Providing comprehensive transaction advisory services to businesses and individuals, Aimee guides clients through the complex process of buying or selling a business. Her areas of focus include due diligence, quality of earnings assessments, working capital consulting, adjusted EBITDA and purchase price evaluations, and sell-side consulting. Aimee values the opportunity to learn about different businesses and industries while building trust and rapport with clients throughout the transaction process. 

 

At Lutz, Aimee's analytical mindset and achievement-oriented approach enable her to deliver thorough, actionable insights during critical transitions. Her ability to build strong relationships with clients while maintaining meticulous attention to financial details has made her a trusted advisor during what is often one of the most significant transactions in a business owner's career. 

 

Werner lives in Gretna, NE, with her husband, Adam, and two kids, Nolan and Noelle. Outside the office, Aimee can be found traveling, attending concerts, trying new restaurants, and spending time with family, friends, and her two dogs Murphy and Cooper. 

402.827.2314

awerner@lutz.us

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• Achiever, Strategic, Learner, Analytical, Futuristic

Morgan Felber

Senior Financial Analyst

Morgan Felber, Senior Financial Analyst, began her career in 2021. She has developed expertise in transaction advisory services through her background in audit and consulting.

Providing both buy and sell-side advisory services, Morgan assists buyers and sellers throughout the full due diligence process. Specifically, she focuses on developing financial models, conducting market research, preparing Quality of Earnings reports, and transaction marketing materials. Morgan values helping clients navigate the complexities of buying or selling a business through strategic, tailored solutions.

Morgan lives in Omaha, NE. Outside the office, she can be found spending time with family and friends, exercising, and attending concerts.

402.514.9208

mfelber@lutz.us

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