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Roofing Contracting Industry Update Q3 2024

Read more about M&A activity and trends in this sector

Roofing Contracting Market Update

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Market and Industry Dynamics

Roofing Contracting Industry and M&A Perspectives

Market Commentary

  • Roofing Contracting is a highly fragmented industry, with the top two largest companies only representing approximately 5% market share in the U.S.
  • M&A activity in the sector has increased in recent years, as small and mid-sized independent operators seek succession strategies and financial partners to facilitate growth opportunities
  • A variety of fundamental industry characteristics contribute to a compelling investment thesis for institutional capital and strategic acquirors, including:
    • Non-discretionary nature of roof repairs mitigates economic cyclicality risk
    • Recurring and re-occurring revenue produced by service and maintenance and re-roofing work creates a durable revenue profile
    • Aging stock of commercial and residential facilities drives the need for roof repairs and maintenance
    • Highly fragmented competitive landscape presents an opportunity for accretive M&A growth strategies

Robust M&A Activity in Recent Periods…

Note: Represents count of select U.S. transactions based on KPMG research Source: Pitchbook, Capital IQ, IBISWorld

…While Remaining a Highly Fragmented Competitive Landscape

Source: https://www.roofingcontractor.com/RC-List-Top-150-2024

M&A Value Drivers and Key Considerations

1

Project Composition: Mix of re-roofing and service offerings vs. new construction; exposure to seasonality and economic cycles

2

Geography and Scale: Localized to a specific geographic region vs. broader coverage area; scalability of operating model

3

Labor and Employment Profile: Self-perform vs. subcontractor mix; union vs. non-union workforce

4

Customer and Project Concentration: Diversification of revenue vs. concentration among a few projects and/or customers 

5

Systems and Accounting: Percentage of completion accounting; whether the existing systems and infrastructure are equipped to support growth

6

Strategic Alignment: How the operations, culture, and shareholder goals align with those of the acquiror

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Roofing Contracting Market Update

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Robert White
Managing Director, KPMG Corporate Finance LLC
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Robert White
Managing Director, KPMG Corporate Finance LLC
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