Established Commercial Roofing Contractor

• Long-standing reputation in the regional commercial roofing market
• Experienced employees and operational leadership with significant industry knowledge
• Established customer relationships and a growing project backlog
• A combination of reroofing, maintenance and service capabilities
• Opportunity to join a larger platform with additional resources, purchasing power and growth opportunities
• Seller’s willingness to remain involved during an orderly ownership and leadership transition

• The buyer was already familiar with the company and had submitted an offer before Catapult became involved
• The buyer was a sophisticated strategic acquirer backed by an experienced private equity firm
• The seller owned the operating property through a separate related entity
• The company’s rent was below market, creating a tradeoff between business valuation and rental income
• A portion of the property was no longer required by the roofing company and could be leased to an unrelated third party
• The seller also owned a separate dumpster and waste-removal company whose largest customer was the roofing business
• The dumpster company was not included in the original transaction proposal

The seller’s financial advisor introduced Catapult after the owner received an Indication of Interest from the private equity-backed strategic buyer.

The advisor wanted the seller to have an experienced representative who could independently assess the offer, negotiate with the buyer and coordinate the ongoing diligence process. This allowed the financial advisor to continue supporting the seller’s broader financial and retirement planning while Catapult managed the transaction.

The unsolicited approach gave the owner an opportunity to convert a significant portion of the value accumulated in the business into personal liquidity while providing the company, its employees and its customers with a path forward as part of a larger organization.

The proposed transaction also allowed the seller to participate in the company’s next stage of growth through retained equity and a continuing leadership role, creating both immediate liquidity and potential future upside.

Catapult first evaluated the buyer’s proposal against the company’s normalized earnings, market valuation and the seller’s financial and personal objectives. We helped the seller understand not only the stated purchase price, but also the economics and risks associated with rollover equity, working capital, employment terms, real estate, indemnification and the numerous other provisions that determine what a seller ultimately receives.

Catapult then worked with the seller and transaction counsel to negotiate the Letter of Intent and establish the key business terms before entering exclusivity.

Once the Letter of Intent was signed, Catapult coordinated the diligence process among the seller, buyer, private equity sponsor, attorneys, accountants, insurance professionals, environmental consultants and other advisors. Catapult organized information, managed follow-up requests and helped keep the transaction moving while allowing management to remain focused on operating the business.

The seller owned the company’s operating property through a separate real estate entity and leased it to the roofing company at below-market rates.

Increasing the entire lease to market rent would have reduced the roofing company’s normalized EBITDA and, therefore, the value attributed to the operating business. After considering the tradeoff, Catapult recommended maintaining the existing below-market rent for the space used by the roofing company in order to support the highest possible business valuation.

At the same time, the company was preparing to make excess space available to an unrelated third-party tenant. Catapult negotiated an increase in the lease for that portion of the property. This allowed the seller to preserve the operating company’s earnings while capturing additional rental income from space that was no longer required by the business.

The seller also owned a separate dumpster and waste-removal company. The roofing company was its largest customer, and its fleet of 38 dumpsters was important to the roofing company’s day-to-day operations.

The dumpster company and its assets were not included in the buyer’s original proposal. Catapult identified the operational connection between the two businesses and negotiated a separate purchase of the dumpsters, generating additional consideration for the seller while ensuring the roofing company retained access to assets necessary for its operations after closing.

The seller successfully completed a transaction with a strategic competitor backed by a private equity firm.

The final structure provided the seller with substantial liquidity at closing, continued ownership through a rollover investment and an opportunity to participate in the future growth of the combined organization. The seller also retained ownership of the real estate and the long-term income potential associated with the property.

Beyond the core business purchase price, Catapult helped the seller:

• Preserve business value through a carefully structured related-party lease
• Increase rental income associated with excess space
• Generate additional consideration through the separate sale of the dumpster fleet
• Negotiate the economics and protections associated with the seller’s rollover investment
• Coordinate a complex, multidisciplinary diligence process
• Establish an orderly transition for the company, its employees and its customers

The result was more than the sale of a roofing company. It was a comprehensive succession transaction that addressed the operating business, related real estate, ancillary assets, management continuity and the seller’s opportunity to benefit from future growth.

This situation is a prime example of how Catapult’s “Connect” services can help business owners deal with the unsolicited “knock at the door.”