Private Equity
Is History Repeating Itself in Roofing?
Kevin Kennedy breaks down the private equity influence in roofing and how it resembles a not-so-distant history
Today’s private equity market resembles the consolidation cycle of the late 1990s and early 2000s in roofing. The current market has cooled but remains active, with disciplined buyers facing higher capital costs and more selective acquisitions.
As a former majority owner of a large commercial roofing company, I witnessed the consolidation roll-ups of the late 1990s and early 2000s. During the Dot-Com and Y2K boom, heavy spending supported the emerging internet ecosystem, while concerns about the Y2K computer glitch further fueled investment. That period was followed by an investment-led recession in 2001, numerous bankruptcies, a more than 70% decline in the NASDAQ Composite, the Sept. 11 attacks, and Enron's collapse.
Hundreds of overvalued internet startups went public, only to run out of cash as their paper wealth disappeared. The question today is whether the Dot-Com era could “rhyme” with a potential fallout from current AI spending?
Fortunately, our roofing company avoided that outcome. Before 2000, we received two strong offers from commercial roofing consolidators. Still, we declined them because of cultural concerns and our desire to retain control, grow independently, and eventually sell to our managers. At the time, I believe there were four major consolidators. Only the Tecta model survived and now ranks second in the 2026 RCM “Top 100” U.S. roofing contractors.
Private Equity’s Interest in Roofing
Private equity activity in roofing began accelerating roughly six years ago, after COVID-19 regulations classified roofing as an essential business. PE firms saw a highly fragmented market with many profitable companies. Unlike the earlier consolidation cycle, they also showed substantial interest in residential roofing contractors.
Strong activity from 2022 through 2025 has slowed, and multiples have declined. However, PE firms remain active and interested in professionally managed companies with documented standard operating procedures, skilled workforces, and profitable residential or commercial operations.
Most recent buyers have become more disciplined after overpaying for underperforming companies in a market affected by tight margins and higher interest rates.
A 2025 study by Terial found that leading commercial targets include national platforms with multistate operations and established service programs. Regional commercial tuck-ins generally focus on lower-middle-market companies generating $3 million to $10 million in revenue. Key value drivers include:
- Clean, reliable financial statements
- Quality backlog
- Recurring revenue
- Seasonal demand patterns
- Management depth
- Limited owner dependency
Terial identified these general deal ranges:
| Business Profile | Revenue Range | Typical EBITDA Multiple | Common Deal Structure |
|---|---|---|---|
| Small owner-operator | Under $5 million | 4-6x | Mostly cash, minimal rollover |
| Mid-market regional | $5–$25 million | 6-8x | Approximately 80% cash / 20% rollover equity |
| Multistate platform | $25 million+ | 8–12x+ | Structured equity; earnouts possible |
| Premium scaled platform | $50 million+ | R10–12x+ | Full institutional terms |
In my view, the multiples above in this September 2026 marketplace should be about 20% lower. This upper end of the higher multiples represents the very top of the market and generally applies to benchmark, highly professional, consistently performing companies that are not owner dependent.
Residential Roofing Roll-Ups
Residential roll-ups approached a frenzy during the most aggressive acquisition period. That activity has slowed following the 2025 bankruptcy of Audax’s Renovo and the 2026 insolvency of Kelly Roofing. Founder Ken Kelly has since returned to buy back the company’s debt and assets after selling the business about six years ago. I know Ken personally and professionally and have strong confidence in his integrity and leadership as he works to move the company and management team forward.
Residential buyers are now more selective. They favor stable, profitable contractors with dependable W-2 sales and field operations, along with strong technical and digital capabilities.
According to a 2026 article by Auxo Capital Advisors, the residential playbook has changed. Because of higher capital costs and previous overvaluations, PE firms are shifting more risk to sellers through complex deal structures:
| Deal Component | Peak-Era Playbook | Current and Future Playbook |
|---|---|---|
| Cash at close | 90%–95% was common | Approximately 70%–80% |
| Rollover equity | 5%–10% | 15%–25% often required |
| Earnouts and notes | Rare or easily achieved | Frequently tied to margins and performance |
| Diligence focus | Revenue and storm volume | Quality of Earnings, owner dependency, and job-level costs |
Hyde Park Capital believes the next 12–24 months may be an attractive window for independent operators generating $1.5 million to $3 million in EBITDA. Major national platforms, including Tecta America and Omnia Exterior Solutions, are actively seeking add-on acquisitions to increase geographic density and expand labor pools.
No one can predict the economy with certainty. In my opinion, the strongest selling opportunities for sale-ready companies may occur during the next two years. After that, economic conditions could create a more buyer-friendly market with lower multiples or a possible recession, which would sharply reduce M&A activity.
Preparing to Sell
The key to achieving the highest possible multiple is maintaining control and positioning the company to be sale-ready. My August 2025 RCM article, “The 10-Year Roadmap to Selling Your Roofing Company,” outlines a broader 10-5-3-2-1 exit-planning process. The following summary highlights the most important steps in the three years before a sale.
Begin With a Valuation
Start with a professional business valuation. Many owners discover that market value differs from their expectations. A valuation identifies value drivers, exposes weaknesses, and establishes a benchmark for improvement.
The owner’s succession plan should be in place to replace the owner at least five years before the exit, and the owner should be able to take a two-week to a month vacation while managers run the day-to-day business operations.
Also assess your personal finances. Then concentrate on your personal, financial, and company goals. Focus on your succession strength and align your goals with potential exit paths, including management buyouts, employee ownership plans, private equity, strategic buyers, and industry consolidators. Each option involves different timelines, valuations, taxes, and financial outcomes.
Work with an exit planner, CPA, tax advisor, and estate attorney well before a transaction. Decisions made years in advance can create opportunities that disappear once negotiations begin.
Three Years Before Exit: Create Value
Focus on improving profitability, strengthening margins, reducing risk, and developing management depth. Remove personal expenses from the business and update customer, supplier, and employment contracts.
Review the company from a buyer’s perspective. Identify accounting issues, one-time expenses, and report inconsistencies before they arise during due diligence. Reliable financial reporting, consistent earnings, and reduced owner dependency can improve valuation and deal terms.
Two Years Before Exit: Become Transaction-Ready
Review corporate records, leases, licenses, and legal matters. Clean up the balance sheet and organize the information buyers will request.
This is also a critical tax-planning window. The sale price is only one part of the outcome; taxes, fees, deal structure, and post-closing obligations determine how much the owner ultimately retains.
One Year Before Exit: Execute
Your advisory team should be in place, financial statements organized, and marketing materials prepared. Key managers should understand their roles throughout the process.
Set clear objectives before negotiations begin. Price matters, but so do risk allocation, payment terms, employee retention, and management’s future role. Well-prepared companies generally experience smoother transactions and negotiate from a stronger position.
The Earlier You Start, the Better
The best exits rarely happen by accident. Planning ahead three to five years provides more options, stronger buyers, and greater control.
Whether you plan to transfer the company to family, sell to management, or pursue private equity, preparation creates value, reduces taxes, and supports long-term financial security. Selling a company is not a single transaction—it is a process.
In closing, if you want to sell in the next two years and the process feels overwhelming, consider working with an exit planner experienced in roofing-industry M&A. Owners should stay focused on succession and running the business. Let experienced professionals focus on maximizing value, managing taxes, bringing the best opportunities to the table, and representing you in the day-to-day M&A process.
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