Deal Breakdown: Is This $1.97M Roofing Biz the Perfect Cash Cow — or a Risky Ride?

“Multi-State Roofing Biz With $393K Profit... or a Subcontractor Timebomb?”

Business Type: Commercial Roofing & Construction
Location: Parker, CO & Omaha, NE
Asking Price: $1,250,000
Cash Flow (NOI): $393,000
Gross Revenue: $1,970,000
Owner Involvement: Semi-Absentee (Seller open to staying 6–9 months)
Team: Subcontractors + Established Network
Why They’re Selling: Moving on to other ventures

📈 The Quick Take:
A high-margin, commercial-focused roofing and construction firm operating across Colorado and Nebraska — with nearly $2M in revenue and lean overhead. It checks the right boxes for operational efficiency, but you’ll need to dig into labor reliance and client contracts before going all in.

✅ Why This Deal Could Nail It

Strong Profit Margins:
$393K in net operating income on $1.97M in revenue = a 20% margin. For a construction firm, that’s elite.

Multi-State Presence:
Already active in the Denver and Omaha metros — you’re buying an operational footprint across two growing markets.

Lean Operation:
Minimal fixed overhead thanks to a home-based setup and subcontractor model. That means flexibility and scalability with fewer headaches.

Commercial Clientele = Stability:
95% of business comes from commercial contracts — typically higher-value, repeatable jobs with better payment terms than residential.

Owner Support Built-In:
The seller is willing to stay on for 6–9 months post-sale. That gives you a real transition runway — not a “good luck and goodbye.”

⚠️ But Let’s Not Shingle Over the Cracks

Subcontractor Dependency:
There’s no in-house labor crew. If subs jump ship or increase rates, your margins (and timelines) are at risk.

No Mention of Signed Contracts:
If customers aren’t locked in via long-term agreements, “repeat clients” could vanish post-sale. You’ll want to see pipeline proof and historic retention.

Opaque Financials:
We see NOI but no clean EBITDA or addbacks list. You’ll need a quality of earnings (QoE) report to verify true profitability.

Asset Clarity Missing:
What are you actually buying? Are there trucks, tools, software licenses? No FF&E breakdown provided, so ask before assuming.

Owner's Role Still Needed:
Even with subs doing the work, someone has to manage the chaos. If the seller’s been key to winning bids or managing jobs, that gap needs to be filled.

📊 Financial Snapshot

📌 Market Benchmark:
Construction and service-based businesses typically trade between 2.5x and 4x cash flow. At 3.18x, this is priced fairly — assuming the financials are clean and the risk of turnover is low.

🧠 Smart Questions to Ask Before the LOI

• Are there written contracts with recurring clients?
• What % of revenue comes from one-time vs. repeat jobs?
• How long has each subcontractor been on the team? Any exclusivity?
• What’s the sales pipeline look like for the next 6–12 months?
• What roles did the owner play in estimating, bidding, and managing?
• Are there any liens, lawsuits, or safety violations on file?
• Can we get a 2-year CapEx and expense breakdown?

🏁 Final Verdict

🟢 Good Buy If:
You can verify client stickiness, map out a labor continuity plan, and confidently take over sales or assign a manager. With smart systems and growth strategies, this is a profitable, scalable platform.

🔴 Bad Buy If:
You uncover turnover risk, weak contracts, or over-reliance on one person (the owner). Without process and control, you’re just holding a bag of busywork.

📚 Weekly Wisdom: What to Learn From This Deal

✅ Look For:
• Multi-market presence with minimal overhead
• Commercial client focus
• Willing seller with transition support
• Clean margin profile

🚫 Watch Out For:
• No in-house crews = control risk
• Absence of signed contracts
• Soft disclosures on assets or CapEx
• Misunderstood owner involvement

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Rahul Issar & Jorge Viveros
Co-Founders, Acquire Weekly