What is my roofing company worth?

Most roofing companies are valued on earnings, not revenue. A buyer works out what the business earns in a normal year, then multiplies it by a number that reflects how risky and how transferable those earnings look. Under both sits a floor: what the trucks and equipment would bring if the business were sold off in pieces. These match the income, market and asset approaches the SBA lists for owners preparing to sell, and as SCORE points out, professionals usually land on a range, not one number. So do we.

1. Earnings. For an owner-run roofer we use seller's discretionary earnings (SDE): pretax profit plus one owner's pay and the costs a new owner would not carry. BizBuySell lists owner pay, owner health insurance, one-time costs, interest and depreciation among the usual items. In roofing that means your personal truck and fuel, a one-time lawsuit, depreciation on trucks, trailers and lifts, and interest on equipment loans. A spouse who really runs the office, your estimator's bonus and the cost of fixing a bad job are real costs, not add-backs. The roofing add-backs checklist has the full list.

2. A normal year, not your best storm year. One hail season can double revenue, and buyers will not pay a multiple on a windfall. Sofer Advisors gives the example of a roofer showing $4M in a hail year that is really a $1.8M business. When storm work is 30% or more of your revenue and you tell us your quietest recent year, we average it in, the way a buyer would.

3. The multiple. We start from an illustrative base multiple for roofing at your size, which is our estimate because no sold-deal benchmark exists for roofing. An SDE multiple and an EBITDA multiple measure different things: SCORE explains that EBITDA multiples run higher but apply to a smaller number. Never compare one with the other.

4. Adjustments. Then we move the multiple up or down for what buyers check. Lutz, an accounting and M&A firm, says buyers split revenue into retail versus insurance, commercial versus residential and new construction versus reroof or service, and most prefer little new construction. We also ask how much the company needs you, who holds the license, how concentrated your customers are, who installs your roofs, your warranty promises, safety record and how you handle insurance claims.

Here is a made-up example. "Ridgeline Roofing" (not a real company) shows $180,000 pretax profit. Add the owner's $120,000 salary, a $15,000 personal truck lease, a $25,000 one-time legal bill, $40,000 of depreciation and $10,000 of interest, and SDE is $390,000. At an invented 2.5x, that is $975,000. Half a turn either way on $390,000 is $195,000, which is why the adjustments matter so much.

5. The asset floor. Under the earnings value sits what the business owns at today's market value, less what it owes: trucks, trailers and dumpsters, lifts and safety gear, material on hand, receivables including insurance supplements still owed. SCORE describes this approach as most useful for asset-heavy or struggling businesses. For a profitable roofer it comes out lower, so it works as a floor. If your earnings value lands close to it, the earnings are not doing much work, and it pays to find out why before you go to market.

The mistakes we see most: pricing on revenue instead of earnings, pricing off the best storm year, adding back costs that are real, and forgetting that the headline price is not the cash you keep. Structure and taxes change what you walk away with, and the IRS treats the sale of a business as a sale of each asset in many cases. Talk to a tax adviser early. A free estimate, including ours, is a starting point and not an appraisal. For estate planning, a partner buyout or an SBA loan you may need a credentialed appraiser.

The full formula, the bands and every estimate behind them are on our methodology page.

Roofing companies are priced on one of two numbers, and knowing which side of the line you sit on matters more than any single multiple.

SDE is what one full-time owner takes out of the business before paying themselves and before debt. It is how individual buyers and their SBA lenders look at a company where the owner still sells or runs jobs.

Adjusted EBITDA is what the business earns for an owner who does not work in it. It starts from SDE and subtracts a fair salary for a general manager to do your job. For a sense of scale, the national median wage for general and operations managers was $101,280 in May 2023, before payroll taxes and benefits. Private equity and larger strategic buyers price on this number. Axial reports that roofing companies in its market had a median EBITDA of $1.5M and a minimum of $503K.

Morgan and Westfield puts the rough dividing line at about $1M: SDE below it with a working owner, EBITDA above it. Our calculator follows that. It uses SDE when adjusted EBITDA is under $500,000, EBITDA at $1M or more, and a blend in between so a small change in profit does not swing your value by hundreds of thousands. If the business cannot run without you, we keep at least half the weight on SDE however large the profit.

The SDE vs EBITDA guide runs both on the same made-up company. To see which side of the line you are on, start the free estimate.