We were engaged as Business Valuers to assess the market worth of a Roofing business in Victoria. The business started life as a small roofing contractor and has grown significantly over the past 15 years to become quite a large player in the industry with a turnover just shy of $30 million (at the time of engagement). It’s product mix was 100% commercial roofing thus a very specialised business and obviously did very well. Key staff were long term and well trained and financials were in excellent order. The business was showing excellent growth despite the concern in the building industry at the time. Given the specialised nature of the Roofing Business it was difficult to find any comparable businesses that had recently been sold. A risk return and return on investment method was decided to be the best method to assess this business. Given the growth in the business a weighted average of the last 3 years adjusted EBITDA was used. Weighted Average – first year weighted one, second year weighted two, and final year weighted three, thus emphasis is placed on final year profit.
A multiple was decided upon using a risk return assessment on the business. This multiple provided us with a figure which was then assessed as to whether or not it provided a reasonable return on investment to a likely new owner. Co-incidentally we had just previously completed a valuation on a Building Business. Whilst these two businesses were in a different part of the industry, both businesses had similar aspects and returned similar multiples.