Flooring installer - valuation multiple help

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by a searcher from University of South Florida
in Orlando, FL, USA

10mos ago

Flooring installer - valuation multiple help

Looking at an off market deal. Company provides residential as well as commercial flooring installation, as well as design assistance. Any help on valuation multiples (SDE / EBITDA) would be helpful. Since the deal is off market, I'm looking to craft and educate the seller from day 1 and want to have a fair value based on size, type of work, other intangible deal drivers to consider. Negotiating in good faith, understanding that the business has been in place for a long time and the Seller is ready to retire. Other observations (positive / watchouts) from operators in this space would be highly appreciated. I'll take all your thoughts, experiences (good and bad). What's on my radar: - Cyclicality, pseudo-discretionary spend, extended cash conversion cycles if cash cycle is not defined up front with customers / GC / etc. - Commoditized, lower barriers to entry than other industries, culture, quality, speed and customer service matter. Much of this is dependent on the team in place. Thanks! K

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reply by a searcher 10mos ago
from University of South Florida in Orlando, FL, USA

Thank you Shauna - At which point ($750k, $1m, etc) does it get closer to 3+ SDE vs 1.9M? Any chance you could look at the 4.4x and what the SDE was compared to the others?

reply by a searcher 10mos ago
from Southern Polytechnic State Univerisity in Clarkesville, GA 30523, USA

Yes, owner dependancy is a major factor. But these should not go over 3x EBITDA. Working capital is going to be your biggest hurdle for educating the owner. Contract flooring businesses are going to need a lot!