Does anyone have advice - Under LOI on a Roofing Business

January 16, 2025

by a searcher from Northwestern University - Kellogg School of Management in St. Louis, MO, USA

Hi everyone,

I'm currently under LOI to acquire a roofing business. This is my first acquisition, and the roofing industry is new to me, so I'm eager to learn from those who have been through this process before.

Specifically, I'd love to hear your thoughts on:

Key diligence items to focus on when acquiring a roofing business: Are there any industry-specific red flags or areas that require extra scrutiny? What are common pitfalls?

Helpful experts or consultants to engage during the diligence process. Have you worked with any attorneys, accountants, industry consultants, or other professionals who specialize in roofing or similar trades and were particularly valuable? Recommendations would be fantastic.

Post-acquisition integration challenges or opportunities unique to the roofing industry. What were some unexpected hurdles or successes you encountered after closing?

Any other general advice for a first-time buyer in this space would also be welcome.

Reply by a professional
from University of Notre Dame in New York, NY, USA

Hey - I have a number of clients doing roofing (both resi and commercial) deals and rollups right now and have a lot of insight on the space. A major consideration will be licensing and who can qualify the business post-closing (is the seller staying on with rollover? is there a key employee you can elevate post closing that can qualify the license?). This is the most important consideration in diligence and needs to get ironed out on the front-end. You'd also want to look into 1099s vs W-2s and make sure anyone who's a 1099 would actually be considered a 1099 by the IRS (otherwise you could owe payroll tax and penalties for all open years post-closing).

Happy to chat - I do a ton of these. Shoot me a DM or email me at redacted

Reply by a professional
in Detroit, MI, USA

On the financial due diligence side:

For a roofing business or construction=like business, I would look at their revenue streams and how they're recognized on the P&L.

Some questions to consider:
1) When are they invoicing and collecting from the customer?
2) When are they booking revenue to the P&L?
3) Do they accept deposits for work? How are they recognizing these?
4) Do they do any Percentage Completion billing or AIA billing?

The answers to these questions will dictate how accurately revenue is being reported on the financials which can swing the EBITDA you underwrote quite drastically.

Shoot me a message or email with any questions, happy to help!

+10 more replies.

Join the discussion