Metal roofing biz valuation

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by a searcher in McMinnville, OR 97128, USA

5h ago

Metal roofing biz valuation

Looking at valuating and purchasing a roofing company that makes their own metal roofing panels. This is unique as most roofers purchase panels from a manufacturer. At the same time, the company has 11 “employees” all under the table. The business hasn’t paid taxes. Doesn’t appear to have any real books. It seems nearly worthless in a lot of ways but we are seeing a large margin. Currently using bank statements to verify and create records etc. Machines and tools are probably worth $250k or less. WIP is at 1.2m for the year with a projected margin in the 30-50% range. What would you value it at knowing this and what would you want to know before writing an offer?

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Reply by a professional 42m ago
from Université Paris in London, UK

Hi @redacted‌, Most of that "large margin" probably isn't real — or at least it isn't transferable to you. It exists because the business isn't paying what a compliant operator has to pay: payroll taxes, workers' comp, unemployment insurance, income tax. The moment you legitimize it (and you'll have to), that cost base appears and the margin compresses. So I'd value it off normalized economics — rebuild the P&L as if it were fully compliant — not off what the seller looks like they're earning today. What the "$1.2m WIP for the year" actually is — work-in-progress/backlog, booked revenue, or cash collected? And a "projected" 30–50% margin from a business with no books is a guess; the bank-statement rebuild you're doing will tell you more. On valuation, you can start to treat asset value as the floor, build a compliant P&L to get a real earnings number, apply a conservative small-biz multiple to that, then use structure (asset deal, holdback, indemnities, maybe an earnout to bridge the verification gap) to handle everything you can't verify today.

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