Roofing Business Valuation Checklist (Australia)

Roofing Business Valuation Checklist — Australia

Work through each section before making or confirming an offer. Mark items as complete only when you have documentary evidence, not verbal assurance (verbal assurance is worth what you paid for it).

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Section 1: Licensing and Compliance

• Confirm who holds the contractor licence — the owner personally, or the business entity?
• Check whether your state requires a separate licence for commercial vs. residential roofing work
• Verify the licence is current with no conditions, suspensions, or pending complaints (check your state's licensing authority: QBCC in Queensland, NSW Fair Trading, VBA in Victoria, CBS in SA, Building Services Board in WA)
• Identify which licences are required for the work the business currently does (roof plumbing and sheet metal roofing may require separate endorsements)
• Confirm that any subcontractors used hold appropriate licences — check a sample of recent subcontractor agreements
• Review whether the business has ever operated without the required licence (check for disciplinary actions on record)
• Confirm the business is registered with the relevant state building authority (separate from contractor licence in some states)
• If the business does metal roofing or guttering, check for any plumbing licence requirements in your state
• Identify the transition plan: if the current owner holds the licence personally, who will hold it after settlement?

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Section 2: Financial Health

• Obtain three years of profit and loss statements (minimum — five years is better for a roofing business given weather-driven volatility)
• Obtain three years of tax returns and confirm they broadly match the P&L (a material discrepancy is a red flag, not a negotiating starting point)
• Obtain the last 12 months of bank statements and reconcile cash receipts against reported revenue
• Calculate EBITDA for each year and note the trend (growing, flat, declining, and why)
• Identify all owner add-backs: personal expenses run through the business, owner salary above a reasonable market rate, one-off costs. Document each one with evidence — not all add-backs survive scrutiny
• Calculate normalised EBITDA after scrutinised add-backs only
• Ask for an aged debtors report — roofing businesses with slow-paying commercial clients can have significant working capital tied up in receivables
• Check whether any revenue is from owner-specific contracts or relationships that won't transfer (personal goodwill vs. business goodwill distinction)
• Request the last three BAS lodgements and confirm GST treatment is consistent with reported revenue
• Check for any ATO payment arrangements, outstanding PAYG or GST liabilities, or director penalty notices
• Identify whether the business carries significant work in progress at any given time — and how it's recognised in the P&L
• Examine seasonal patterns in revenue: roofing typically slows in winter in southern states and during wet season in Queensland/NT. Does the P&L show this? If not, ask why.

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Section 3: Workforce Assessment

• Obtain a list of all employees with start dates, roles, and employment type (full-time, part-time, casual)
• Obtain a list of all subcontractors used in the last 12 months and the approximate revenue they've generated
• Calculate the employee-to-subcontractor revenue split — what percentage of work is done by employees vs. contractors?
• Review a sample of subcontractor agreements and check whether the ATO's contractor vs. employee tests are satisfied (look for integration into business operations, provision of own tools, ability to subcontract again, etc.)
• Check for any Fair Work disputes, unfair dismissal claims, or outstanding payroll obligations
• Confirm all employee entitlements (annual leave, long service leave, super) are current and accrued accurately — get a written schedule from the seller
• Identify key personnel: who are the leading hands, site supervisors, or foremen that the business depends on? Are any of them related to the seller?
• Ask whether key personnel know the business is for sale — and if so, have any indicated they might leave?
• Assess whether the workforce would be retained under new ownership: what are the employment contract terms? Are there any retention payments owed?
• Review the last two years of payroll records to confirm reported wages match the accounts

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Section 4: Safety Record and WHS

• Request the last three years of WorkSafe/WHS incident reports (serious incidents, near-misses, and any notifiable incidents)
• Obtain the current insurance schedule — specifically public liability, professional indemnity, and workers compensation
• Check insurance claims history for the last five years: frequency, size, and nature of claims
• Confirm the business has a current Safe Work Method Statement (SWMS) for all high-risk roofing activities
• Check for any outstanding WHS improvement notices, prohibition notices, or penalties from the relevant regulator
• Review the site safety induction process and confirm there is a documented procedure
• Confirm the business complies with height safety requirements — harness and anchor points, HSWA requirements — and that equipment is regularly inspected
• Ask whether the business has ever had a fatality or serious injury on site. If yes, obtain the full incident and investigation record.
• Confirm whether any past incidents have resulted in increased workers' compensation premiums that are still affecting the business

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Section 5: Revenue and Customer Base

• Break down revenue by customer type: residential, commercial, insurance work, government
• Identify the top 10 customers by revenue and calculate their percentage of total revenue
• If any single customer represents more than 20% of revenue, treat this as material concentration risk
• Obtain evidence of active contracts with commercial or government customers — verify they will transfer with the business
• For insurance-based work (storm damage, hail repair): understand how dependent the business is on weather events, and when the last significant event occurred
• Ask for a pipeline report — what work is currently quoted, accepted, or in progress?
• Review repeat customer rates: a roofing business with a high proportion of repeat commercial maintenance clients is more stable than one dependent on one-off new-build work
• Check whether any revenue comes from preferred supplier relationships with builders or developers that are tied to the seller personally

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Section 6: Plant, Equipment and Fleet

• Obtain a full asset register — vehicles, trailers, elevated work platforms, scaffold, tools
• Confirm which assets are owned outright vs. financed (check for registered encumbrances via PPSR)
• Review the age and condition of the vehicle fleet: roofing businesses are hard on vehicles and scheduled replacement costs should be factored into your normalised earnings
• Check whether any equipment is leased rather than owned — will the leases transfer?
• Confirm whether the asking price includes all plant and equipment or whether any items will be retained by the seller
• Get an independent assessment of key equipment value if the business is being sold with significant plant

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Section 7: Valuation Cross-Check

• Calculate the implied EBITDA multiple: purchase price divided by normalised EBITDA
• For residential roofing businesses: typical multiples range from 2x to 3x EBITDA. For commercial-focused businesses with contracts: 2.5x to 3.5x is more common. Businesses heavily reliant on insurance/storm work should be valued conservatively (under 2.5x) due to revenue unpredictability
• Cross-check against a net asset value: what are the tangible assets worth? How much are you paying as goodwill?
• Assess the goodwill quality: is the goodwill attached to the business (brand, systems, contract base) or to the owner personally (their relationships, their licence, their reputation)?
• Model three scenarios — base case, 10% revenue decline, 20% revenue decline — and confirm you can service debt and pay yourself in each
• Calculate the payback period: if you pay 2.5x EBITDA and take all profit as return, how many years to recover the purchase price? This should be under 5 years on a base-case view
• Sense-check the price against comparable businesses currently listed for sale (Business For Sale, Seek Business, Talk To A Broker)

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Section 8: Transition Planning

• Confirm the seller handover period: four to eight weeks is typical for a roofing business. Less than four weeks for a business with significant commercial relationships is a risk
• Identify which relationships the seller will introduce you to: key commercial clients, preferred suppliers, referral sources
• Agree what happens if any key contracts terminate within the first six months post-settlement
• Confirm the restraint of trade clause covers geography, duration, and both direct and referral competition
• Identify whether the seller is willing to accept a small vendor finance component — this aligns their incentive to ensure a clean transition

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Related resources:

• Landscaping Business Valuation Checklist — same format for a different trade
• Trades Business Assessment Checklist — for early-stage screening before you go deep
• How much is a roofing business worth? — the blog article that explains the numbers behind this checklist