Latest / The Buyer & Seller Podcast with Fexingo: Business Brokers, Exits, and Private Sales Explained / How a Roofing Company Sold for 9x EBITDA by Creating Blueprints
Transcript
- Lucas: Most roofing companies sell for five to six times EBITDA. That's the ceiling. But a company in Phoenix — four crews, about nine million in revenue — just sold for nine times. And the reason is something almost no roofer does. Luna: Okay, I've got to hear this. What did they do? Buy a fleet of fancy trucks? Land a massive contract? Lucas: Nope. They created blueprints. Real, detailed, architectural-style blueprints for every single job. Roofing is an industry built on rough estimates and verbal agreements. You come out, walk the roof, scribble some numbers on a pad, give a verbal quote. That's it. This owner spent a year and about fifteen thousand dollars documenting every project. Luna: That's a big change. What went into those blueprints exactly? Lucas: Every job had a digital file with a measured drawing, material list with exact quantities, labor hours by task, subcontractor scope, timeline. If a buyer picks up one of those files, they see a complete project plan. No guesswork. The owner told me — off the record, because he's under a non-disclosure — that at first his crew pushed back hard. They said, 'We're roofers, not architects.' But he stuck with it. Luna: I can see why a buyer would love that. But before we go deeper — I've been wanting to mention something. Lucas, these conversations we have, they've genuinely changed how I think about business value. And I hear from listeners all the time who say the same. If this podcast has helped you in any way, maybe you've applied one of these strategies or just saw a sale process more clearly — a couple of dollars a month is what keeps these episodes ad-free. It's at buy me a coffee dot com slash fexingo. No pressure, just if you've gotten something out of it. Lucas: Yeah, I'd second that. It's a small thing that makes a real difference. So back to blueprints — the key insight is that buyers hate uncertainty. A roofer without documentation is a black box. A roofer with blueprints is a replicable system. Luna: Exactly. So how did that translate into the multiple? Walk me through the math. Lucas: The company had about one point two million in EBITDA. At five times, that's six million. At nine times, it's ten point eight million. The difference is four point eight million dollars — all because of a fifteen thousand dollar investment in documentation. The buyer, a private equity firm that consolidates home-service companies, said the blueprints were the single biggest factor in their valuation. Luna: Why would a PE firm care so much about blueprints? I mean, they're buying a roofing company, not a software platform. Lucas: Because they want to scale it. PE firms don't buy a business to keep it the same. They buy it to roll up other companies and standardize operations. The blueprints proved that this owner had already done the hard work of systematizing the business. The buyer could plug in a new acquisition, hand them the blueprint template, and say, 'This is how we do roofs now.' Without that, each new acquisition would be a messy integration. Luna: So it's about replicability. The blueprints are essentially an operating manual. Lucas: Exactly. And that's rare in trades. Most roofing companies are built around the owner's relationships and memory. When you ask for documentation, they say, 'I've got it in my head.' That's worth zero to a buyer. What's worth something is a system that can survive the owner's departure. Luna: How did the owner actually implement this? Fifteen grand over a year — that's not a huge budget. But it's a significant time commitment. Lucas: He hired a part-time document controller. Someone with basic CAD skills, about twenty-five dollars an hour, twenty hours a week. That person shadowed the crews, measured roofs, photographed every job, and built the digital files. The owner reviewed each one. After about six months, the crew started to see the value — fewer miscommunications, fewer material shortages. The blueprints saved them money on rework. Luna: So it paid for itself operationally before the sale even happened. That's a double win. Lucas: It did. The owner estimated they saved about eight thousand dollars in material waste that first year. So the net cost was just seven grand. And then it added four point eight million to the exit. That's a seven-hundred-to-one return. Luna: Are there other industries where this kind of documentation gap exists? I'm thinking of landscaping, cleaning services, maybe even some retail. Lucas: Absolutely. Any business where the work is done in the field and the owner is the primary knowledge holder. Landscaping is a great example — route optimization, client preferences, equipment maintenance schedules. All of that can be documented. A cleaning company with standardized checklists for every client type would be highly attractive to a buyer. Luna: But isn't there a risk of over-documenting? Making the business too rigid? Lucas: That's a fair concern. The owner I spoke to said they built the blueprints as guidelines, not straightjackets. Crews could deviate if a roof was unusual, but they had to note the deviation. That preserves flexibility while still creating a record. The buyer actually valued that — they saw it as proof the system was practical, not theoretical. Luna: What about the sales process itself? Did the blueprints change how the company was marketed? Lucas: They became the centerpiece of the offering memorandum. The broker led with it: 'This is not a typical roofing company. Here's proof of a scalable system.' They showed sample blueprints, included a testimonial from a commercial client who loved the precision. It changed the conversation from 'risky construction business' to 'platform for roll-up.' Six PE firms bid on the deal. Luna: Six bids. That's unheard of for a small roofing company. Lucas: Totally. Most get three or four if they're lucky. But the blueprints created a competitive dynamic. Each buyer knew the others saw a lower-risk asset. The final buyer paid a premium because they were afraid of losing it. Luna: So for a business owner listening — what's the first step? Where do you start if you have no documentation at all? Lucas: Pick one process. The most critical one. For a roofer, that's the estimate to install workflow. Document that in detail. Then use it as a template for others. The key is to start small and prove the concept. You don't need to blueprint every job overnight. But you do need to show a buyer that you've begun the journey. Luna: And the cost is minimal compared to the payoff. I'm thinking of a client I worked with — a landscaping firm that started documenting its maintenance routes. They saw a twenty percent increase in crew productivity just from having a standard route plan. Lucas: That's exactly the pattern. Documentation forces efficiency. When you write down how you do something, you see the waste. The Phoenix owner found that his crews were spending about fifteen percent of their time looking for tools and materials. The blueprints included a tool checklist for each job — that time vanished. Luna: So the blueprints improved margins even before the sale. That's a virtuous cycle: better margins, higher EBITDA, higher multiple. Lucas: Exactly. And the buyer saw that too. They paid nine times on a one point two million EBITDA. But that EBITDA was already higher than industry average because of the efficiency gains. So the multiple was applied to a bigger number. Luna: Let me ask a skeptical question: wouldn't a sophisticated buyer discount for the fact that the blueprints were created by a document controller, not the owner? Doesn't that introduce key-person risk if the document controller leaves? Lucas: Good question. The buyer addressed that by requiring the document controller to stay for a six-month transition. And they cross-trained another employee. But you're right — if the documentation is only in one person's head, that's a risk. The ideal is to make the system self-sustaining, which means documenting how to document. Luna: So a blueprint for the blueprints. Lucas: Exactly. The owner had a manual for the document controller — templates, naming conventions, quality standards. That's what made the system robust. The buyer saw that and felt confident. Luna: I wonder if this approach works for professional services too. Like a consulting firm that documents its methodology. Lucas: It works even better there because the margins are higher. But the challenge is intellectual property — consultants are often reluctant to codify their secret sauce. However, the same principle applies: a buyer wants to see that the firm's value isn't tied to a single rainmaker. Documentation makes the firm sellable. Luna: Any final advice for a business owner considering this? Something to do this week? Lucas: Identify the one process that, if documented, would reduce buyer uncertainty the most. For most service businesses, it's the delivery process — how you actually do the work. Start a digital file, take photos, write step-by-step instructions. Invest a few hundred dollars and a few hours. It might be the best return you ever get. Luna: And if you're thinking about selling in the next three to five years, start now. Documentation takes time, but it's cheap leverage. Lucas: Yeah. The owner of that roofing company started a year before he even thought about selling. He just wanted to run a better business. The exit was a happy byproduct.