How to buy a roofing company (and test whether the revenue lasts)
Short answer
To buy a roofing company, first separate revenue by source: retail replacement, insurance-claim (storm) work, commercial roofing and repairs. Storm-driven revenue can spike after a hail or wind season and fall away the next year, so look at three or more years. Then check lead sources and whether they belong to the business or the owner, how crews are engaged (employees or subcontractors), workmanship warranties still outstanding, licensing, and workers' compensation and safety history.
Roofing is a big-ticket, weather-sensitive, labor-heavy business. A roofing company can show one spectacular year that doesn't predict the next.
Revenue by source
| Source | Stability | Check |
|---|---|---|
| Retail residential replacement | Moderate | Lead sources, close rate, average job |
| Insurance / storm restoration | Volatile | Revenue by year vs storm events; receivables from carriers |
| Commercial roofing | Contract-driven | Backlog, GC concentration, bonding |
| Repairs and maintenance | Steadier | Repeat customers, service agreements |
Worked example: averaging out the storm year
Illustrative example, not a real company
A company's revenue over four years: $2.1 million, $2.3 million, $4.6 million (the year after a major hailstorm) and $2.9 million (the most recent year, with storm work still trailing off). Earnings before the owner were $310,000, $340,000, $920,000 and $480,000. The seller prices on the last two years' average: ($920,000 + $480,000) ÷ 2 = $700,000. The four-year average is ($310,000 + $340,000 + $920,000 + $480,000) ÷ 4 = $512,500. Strip storm work out of each year using the job list (job source tells you which were insurance claims) and the steady business may be closer to the first two years. Which number you believe changes the deal by hundreds of thousands. Lenders use historical earnings and will ask the same question.
Insurance work: receivables, deductibles and state rules
Storm restoration revenue arrives through homeowners' insurance claims, which means slower collections, supplements negotiated with adjusters, and the homeowner's deductible collected separately. Ask for receivables aged by carrier and by homeowner. Some states regulate how contractors interact with insurance claims, including restrictions on contractors acting like public adjusters and on waiving or rebating deductibles. If the company's sales pitch relies on practices your state restricts, that revenue isn't something to pay for. Ask the seller how claims are handled and have your attorney check the state's rules.
Add-back and liability traps
- Owner as top salesperson. Roof sales often depend on the owner's inspections and estimates.
- Subcontractor classification. Misclassified crews create tax and liability exposure. See employees when buying.
- Outstanding warranties on past work.
- Lead costs: canvassing and paid lead programs that stop when the owner leaves.
- Insurance receivables that are slow or disputed.
Documents to request
- Job list with source, size, margin (3+ years); CRM and lead source data.
- Tax returns, P&Ls, bank deposits; receivables aging by carrier/customer.
- Subcontractor agreements and certificates of insurance.
- Warranty terms and claims log.
- Licences, workers' comp and safety records.
Crews, safety and licensing
Falls are a leading cause of death in construction, and OSHA's fall protection standard for construction (29 CFR 1926, Subpart M) applies to roofing work. Ask for the safety program, the injury log, any OSHA citations, and the workers' compensation experience modifier, which affects premiums and whether commercial customers will hire the company. Many roofers use subcontracted crews. Get every subcontract, certificates of insurance (general liability and workers' comp), and check whether crews are treated like employees in practice. If a sub's worker is hurt and the sub has no coverage, the claim may land on you. Licensing varies: some states license roofers specifically, others through general contractor licences, and cities may add their own. Find out who holds the licence and whether it stays.
Worked example: pricing workmanship warranties you inherit
Illustrative example, not real claim rates
The company installed about 1,800 roofs over the last ten years with a 10-year workmanship warranty. Its claims log shows 2% of roofs needing warranty work, at an average cost of $1,600 per claim, spread over the warranty period. Roughly 1,800 × 2% = 36 claims across ten years, or about 3.6 a year; at $1,600 each, about $5,800 a year. Modest, if the log is complete. Now ask whether claims were recorded consistently: if the seller fixed many leaks himself on weekends without logging them, the real rate could be several times higher. Treat the warranty book as a liability, estimate it from the records, and negotiate a holdback or price adjustment if the records are thin.
What moves the value of a roofing company
We don't value deals or publish multiples we can't verify. Appraisers and lenders weigh these factors:
| Factor | Supports a higher value | Pulls it lower |
|---|---|---|
| Revenue source | Retail replacement and repairs, steady across years | Storm work from one event |
| Lead generation | Owned channels: referrals, reviews, repeat customers | Paid leads and door-knocking that stop when the owner leaves |
| Sales | Several trained estimators | Owner inspects and sells every roof |
| Crews | Stable, insured, properly engaged | Uninsured subs, classification risk |
| Warranty exposure | Low claims, documented workmanship | Rising callbacks |
| Safety | Low experience modifier, clean OSHA history | Citations, serious injuries |
The first 90 days after you buy
Confirm the licence holder, insurance and workers' compensation are in place for your entity before the first job. Keep crews and estimators, and finish every job in progress to the seller's standard; a leaking new roof in month one is the worst possible introduction. Review open insurance claims and receivables weekly, and set up your own warranty tracking so you know what you've promised.
How jobs are sold, and who owns the leads
Roofing revenue depends on how the work is sold: door-to-door canvassing after storms, referrals and repeat customers, insurance adjuster relationships, or general contractors. Ask for revenue by lead source for three years. If commissioned sales reps sell most of the jobs, read their agreements: commission rate, when it is earned, clawbacks on cancelled or unpaid jobs, and any non-solicitation terms. A team of reps who could leave together and take the pipeline with them is a risk you should price.
Ask too whether crews are employees or subcontractors, and how they are insured. Subcontractor crews without their own workers' compensation can leave the company liable for injuries on its jobs.
Questions to ask the seller
- Can I see the full job list for four years with source, contract value and margin?
- What share of revenue was insurance work in each year, and which storms drove it?
- Who sells and inspects roofs, and what are their close rates?
- How are crews engaged, and do subs carry their own workers' comp?
- What workmanship warranty do you give, and what did warranty work cost last year?
- Any OSHA citations, serious injuries or lawsuits?
Material costs and supplier accounts
Shingles, underlayment and other materials can be a large share of job cost, and prices change. Ask for supplier invoices and job cost reports for a sample of jobs, and check how quickly the company passes price changes through to customers. Find out which supplier accounts and credit terms the business has, and whether those terms rely on the seller's personal guarantee. You may start on less favourable terms until suppliers know you, which affects working capital.
Ask for the company's online reviews over time, too. A sudden change often follows a crew or sales team change.
Frequently asked questions
Why is storm work risky for buyers?
Insurance restoration volume depends on weather events. A record year after a big storm can be followed by a much quieter one. Average across years and look at revenue by job type.
Are roofing crews usually employees?
Many roofing companies use subcontracted crews. That shifts labor cost but raises classification, insurance and quality-control questions. Check contracts and certificates of insurance.
What warranties should I worry about?
Workmanship warranties the company gave on past roofs. If you buy the entity, those obligations come with it; in an asset purchase, customers may still expect them honored.
Is roofing licensed?
Many states and localities license roofing contractors or require general contractor licences. Requirements vary; check where the company operates.
How do I verify a roofing company's revenue?
Tie the job list (customer, address, contract amount, insurance carrier if any) to invoices, bank deposits and tax returns. Material purchases from roofing distributors are a strong cross-check: shingles and underlayment bought should roughly match the squares installed. Insurance jobs should also show carrier payments and homeowner deductibles collected.
Should I buy a roofing company's stock or its assets?
Asset purchases are common because they leave behind claims from past jobs, but customers with workmanship warranties may still expect the business to honor them, and licences may need to be reissued. In a stock purchase every past job's warranty and liability comes with the company. Price the warranty exposure either way, and have your attorney review the warranty terms.
Sources
- IRS: Independent contractor or employee?
- eCFR 29 CFR Part 1926 (OSHA construction safety standards)
- OSHA: Fall protection
- eCFR 29 CFR Part 1926, Subpart M (fall protection in construction)
- OSHA Recordkeeping
- SBA SOP 50 10 8.1 (historical earnings for DSC)
Related guides
General information, not legal, tax, financial or investment advice. Rules and lender practices change; check the linked sources and talk to your attorney, CPA and lender about your deal. Examples with named numbers are illustrations, not real businesses. OKtoBuy's Deal Check does not value businesses or give price opinions.