Roofing Company Multiples
Gathering accurate valuation multiples is an important step in determining the value of a roofing company. However, it is important to note that determining multiples can be very complicated. If you are looking for reliable roofing valuation multiples, consider receiving a business valuation. During a professional business valuation, an expert calculates the current value of your roofing company. In addition, you will receive insights on your company’s valuation multiples, growth potential, strengths, weaknesses, and more. This is helpful information whether you are buying, expanding, or selling a roofing business.
In this article, we discuss the most common valuation multiples for roofing companies. Keep in mind that the values we discuss are industry averages and may yield an inaccurate valuation for your roofing company. For the most accurate estimate, it is important to work with a business appraiser.
Peak Business Valuation is a professional business appraiser that regularly provides roofing company valuations. We can determine accurate roofing company multiples and answer any questions you have. Schedule your free consultation with Peak Business Valuation today to get started!
What Are Roofing Company Multiples?
Valuation multiples are financial ratios that measure a business’s value based on market trends. These multiples are derived from financial metrics such as SDE, EBITDA, or Revenue. When using the market approach to value a roofing company, business appraisers select the most relevant multiples based on the specifics of the business. For more information, refer to Valuation Multiples for a Roofing Company.
Common Roofing Company Valuation Multiples
The most common valuation multiples for roofing companies include SDE, EBITDA, and Revenue multiples. The following sections break down each multiple and provide an average multiple range for roofing companies. While these figures offer helpful insights, they may not reflect your roofing company’s true value. If you are looking for a precise roofing company valuation, connect with an experienced business appraiser. Peak Business Valuation is here to help! Schedule your consultation today.
SDE Multiples for a Roofing Company
SDE multiples are very common when valuing a roofing company. This considers the seller’s discretionary earnings (SDE) of the roofing company. To calculate SDE, valuation analysts adjust net earnings for fair owner compensation, non-recurring expenses, and discretionary expenses. The level of owner involvement can also impact the SDE multiple.
Formula: Value = SDE × Multiple
Range: SDE multiples for roofing companies range from 1.88x – 2.73x SDE.
Roofing Company EBITDA Multiples
EBITDA multiples are another common valuation metric for roofing companies. This multiple is based on a roofing company’s earnings before interest, taxes, depreciation, and amortization (EBITDA). Since EBITDA accounts for debt and tax structures, it enables a straightforward comparison between other businesses in the industry. Peak Business Valuation also uses this multiple to analyze projected earnings and return on investment.
Formula: Value = EBITDA × Multiple
Range: On average, EBITDA multiples for roofing companies fall between 2.47x – 3.55x EBITDA.
Revenue Multiples for a Roofing Company
Revenue multiples calculate the value of a roofing company based on its total revenue over the last 12 months. This is a useful metric when the business has stable profit margins and reflects industry averages. However, Peak Business Valuation often utilizes cashflow-based multiples since profit margins can vary.
Formula: Value = Revenue × Multiple
Range: Revenue multiples for roofing companies generally range from 0.33x – 0.51x revenue.
How to Value a Roofing Company Using Multiples
Valuation experts often use a combination of the market, income, and asset approaches to ensure accuracy. They will consider factors such as industry conditions and financial performance to determine the best approach. In addition, business appraisers may apply weighted averages before providing the final estimate.
In addition to applying proven valuation methods, the valuation process involves analyzing financial statements, accounting for external market conditions, and evaluating key value drivers for a roofing company. If you have any questions, schedule a free consultation with Peak. For additional insights, check out How to Value a Roofing Company.
Rules of Thumb for Roofing Companies
Industry benchmarks can give a broad estimate of a roofing company’s value. However, these oversimplified methods often fail to account for unique factors. For instance, revenue multiples may offer a rough valuation but do not consider profitability or brand reputation. To ensure a reliable estimate, business owners can obtain a professional business valuation. Peak Business Valuation works with roofing companies nationwide. Contact us today to get started on a roofing company valuation!
Factors Affecting Roofing Company Multiples
There are many factors that can impact roofing company multiples. Learning about these factors can help you identify how to increase a roofing company’s performance and value. Below, we highlight a few key considerations that affect roofing company valuation multiples:
- Subcontractor Relationships & Quality Control: Strong relationships with subcontractors promote efficient, high-quality work. This has a positive impact on valuation multiples.
- Material Costs & Supplier Relationships: Managing material costs effectively and maintaining strong supplier relationships can increase profitability and the overall value of a roofing company.
- Brand Reputation & Customer Reviews: A positive brand reputation has a significant impact on the perceived value of your roofing company. This promotes a higher valuation multiple.
- Licensing & Compliance: Adhering to industry standards and maintaining necessary certifications can reduce risks and make a roofing company more appealing to buyers.
For more details on what influences a roofing company valuation, check out Value Drivers for a Roofing Company.
Conclusion
As an experienced business appraiser, Peak Business Valuation frequently helps individuals who are buying, growing, or selling roofing companies. We specialize in calculating roofing company valuation multiples based on current market data. If you need an accurate roofing company valuation, reach out to Peak Business Valuation and schedule a free consultation!
To learn more, see Roofing Business Valuations or How to Value a Roofing Company.
