This scorecard is built on the same framework PE firms use before signing an LOI — adapted for home service business owners. Score yourself honestly. Each metric has three levels: Red (1), Yellow (2), and Green (3). Skip any metric where you don't have data — it won't count against you. Your results will show you exactly where your valuation multiple is being made or lost.
Scoring Guide
Red — Score 1
Below standard. This metric is actively reducing your valuation multiple. Needs immediate attention.
Yellow — Score 2
Developing. You're in the range but not optimized. Buyers will flag this in due diligence.
Green — Score 3
Strong. This metric supports a premium multiple and gives buyers confidence.
Team & Culture
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PE firms want businesses that can survive ownership transition. This category evaluates whether your team and culture are built to outlast you — and whether a buyer inherits a machine or a dependency.
Remaining seller / leader is 40+ years old
Older founders signal stability and longer runway to transition. Younger sellers may want out fast — which creates integration risk for buyers.
Owner has run the business for 5+ years
Tenure demonstrates proven durability through market cycles. Buyers discount businesses where the owner is still learning the operation.
Non-family General Manager with 2+ years tenure and minimal ownership
A professional GM who isn't family (and isn't an owner) is a critical signal that the business can run without the founder. This is one of the highest-value indicators a buyer looks for.
Optional
Well-developed mid-level leadership (field & admin) with 3+ year average tenure
Mid-level leaders are the operational backbone. High average tenure means they know the business deeply — and won't walk when ownership changes.
Sales team average tenure is 2+ years
Sales continuity protects revenue. High turnover in sales signals instability — and buyers know that replacing reps takes 6-12 months of lost production.
Optional
Employee turnover is below 10%
Low turnover means your people are staying — and they're staying for a reason. High turnover inflates training costs, kills morale, and signals a culture problem that buyers will price in.
Strong values and cultural fit with a growth-oriented partner
Culture is the one thing that can't be fixed after a deal closes. Buyers look for a team that will thrive under new ownership — not resist it. This is subjective, but it's real.
Customers & Market
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Revenue quality matters as much as revenue size. PE buyers scrutinize your market size, service mix, and customer concentration to determine how defensible — and scalable — your revenue base really is.
Market
Metro area (MSA) population is 500K or more
Larger markets mean more homes, more demand, and more room to grow. Buyers building a platform need markets they can scale in — small markets cap the upside.
Optional
Primary county has high population density
Density drives efficiency. More homes per square mile means shorter drive times, lower fuel costs, and more jobs per crew per day — all of which improve margins.
High percentage of single-family detached homes and older median home age
Single-family detached homes age 39+ years are the sweet spot for reroofing demand. More old homes in your market = more naturally recurring replacement revenue.
Service Mix
Reroofing (full and partial) is more than 80% of revenue
Reroofing is the most predictable, recurring revenue source in roofing. Buyers want businesses built around replacement — not new construction or repairs that swing with the economy.
Commercial reroofing is less than 20% of revenue
Commercial work carries longer cycles, higher concentration risk, and more complex liability. Residential-first businesses are easier to scale and have more predictable cash flow.
New construction is less than 20% of revenue
New construction revenue is cyclical, margin-thin, and vulnerable to housing market swings. Heavy reliance on it signals volatility — buyers price that risk in.
Insurance-driven work is less than 20% of revenue
Insurance revenue is unpredictable — it swings with storm events and carrier policy changes. A heavy insurance mix increases revenue volatility and due diligence scrutiny.
Offers adjacent services: gutters, insulation, repairs
Adjacent services increase average job value and create repeat touchpoints with customers. Buyers see this as a growth lever they can pull post-acquisition.
Non-roof services (windows, siding) are less than 10% of revenue
Services that don't require roof access introduce complexity, different labor pools, and operational drag. Buyers want roofing-focused businesses — not diversified contractors.
Customer concentration is low — no single customer over 5% of revenue
High customer concentration is one of the fastest ways to kill a deal. If one customer is 20% of your revenue, a buyer is buying a single relationship — not a business.
Customer Satisfaction
300+ Google reviews
Volume of reviews signals scale of operations and proof of customer experience. Buyers look at reviews as a proxy for brand trust and market penetration. Under 150 reviews signals a small, local operation.
Google rating between 4.75 and 5.0
Rating quality matters as much as volume. A 4.4 with 500 reviews tells buyers there are operational problems. A 4.9 with 300 reviews signals a company that consistently delivers.
Operations
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Operations is where most roofing businesses lose value without knowing it. PE buyers want systems, capacity, and proof that you can grow — not just execute at current size.
Project management capacity: approximately 1 PM per $1M in revenue
Understaffed PMs mean missed deadlines, quality issues, and customer complaints. Overstaffed means bloated overhead. The ~$1M per PM ratio signals an operationally healthy business.
Sales capacity: approximately 1 rep per $2M in revenue
The right sales-to-revenue ratio means your team has enough headroom to grow without over-extending. Buyers need confidence that production capacity exists to hit their growth targets.
High future growth potential and demonstrated ability to execute
Buyers aren't paying for where you are — they're paying for where you can go. This is a qualitative assessment of market whitespace, team capacity, and past growth execution.
Safety record: zero OSHA violations in the past 2 years
Safety violations are a direct liability on a buyer's balance sheet — they inherit every open claim. Even one serious violation can require escrow holds or deal restructuring.
Financial
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Clean financials are non-negotiable. PE firms go through your books with a microscope. Revenue, margins, addbacks, and consistency all determine your multiple — and whether a deal even gets to close.
Adjusted EBITDA of $1M or more (last twelve months)
EBITDA (earnings before interest, taxes, depreciation, and amortization) is the number buyers apply a multiple to. Under $1M is sub-scale for most PE buyers — $4M+ is where premium multiples live.
Optional
Revenue is growing double digits — 10%+ two-year CAGR
Growth trajectory is a major multiple driver. Buyers are paying for future cash flows — and a 10%+ compound annual growth rate signals that those future cash flows are real.
Optional
Gross profit (including commissions) is 45% or more
Gross margin is the engine. Under 40% tells buyers your pricing is weak, your subs are over-charging, or your job costing is leaking. 45%+ with room to improve is exactly what a buyer wants to see.
Annual EBITDA margin variance is less than 3% year over year
Consistency = predictability. Buyers hate surprises. A business that swings 8 points in EBITDA margin from year to year signals operational chaos — and gets a lower multiple for it.
Wages and benefits (excluding owner comp) are 12–15% of revenue
This ratio tells buyers how efficiently you're staffed. Under 10% usually means you're understaffed — a growth cap. Over 20% means you're bloated. The 12–15% band is the operational sweet spot.
Addbacks are less than 20% of adjusted EBITDA
Addbacks are legitimate expenses a buyer adjusts out of your earnings. But too many addbacks make buyers nervous — it signals that the "real" profit number is fragile, or worse, manufactured. Under 20% keeps your credibility intact.
Capital expenditure is approximately 2% of annual revenue
CapEx tells buyers what it costs to maintain and grow the business. Under 1% may signal deferred maintenance. Over 2% eats into free cash flow. The ~2% range signals a well-maintained, growing operation.
Deal Dynamics
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Even strong businesses can fail to close because of bad deal dynamics. These three factors tell buyers how motivated and prepared you are — and whether this transaction is worth their time and resources.
Reason for selling
Why you're selling matters enormously. Sellers looking for a growth partner command better terms and smoother transactions than those running to the exit. A full cash-out signals "I'm done" — and buyers negotiate harder for it.
How the deal was sourced
Referral deals close faster, at better terms, with less friction. Sell-side bankers run competitive processes that drive price — but also create adversarial dynamics. Buy-side brokers represent someone else's interests.
Quality and availability of financial and operational data
Buyers can't underwrite what they can't see. Disorganized books, missing data, or informal record-keeping kills deals — or reduces your valuation by the cost of cleaning it up. Clean data = faster close and better terms.
Your Result
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Ready to move your score?
Lance works with a select group of home service CEOs — let's talk about where you are and what's next.