Buying a concrete coating business

Work out what is actually for sale

Before anything else, work out which of these you are looking at. They are worth very different amounts.

A job, with equipment attached

One owner, a grinder, a trailer and a phone number. The work comes because he answers the phone and people know him. There is no system. There is a man with a routine.

This is worth the equipment at fair used value, plus something modest for the brand and the phone number. It is not worth a multiple of earnings. The earnings were the owner, and he is leaving.

A business with systems

A crew that runs floors without the owner on site. Written pricing. Recorded lead sources. Work that arrives from marketing instead of from one person’s address book. This is a real business and it is worth real money.

Something in between

Which is most of them. Your job is to work out honestly which half is which. How much of the revenue is systematized and transfers, and how much walks out with the seller. That split is the most important number in the deal, and it is almost never in the listing.

What to look at, in order

1. Job level profit, not revenue

Revenue tells you how busy they were. It does not tell you whether the work was worth doing. Ask for the last fifty jobs with square footage, invoiced amount, material used and crew hours. Then cost them yourself, the way job costing describes.

If that data does not exist, and in a lot of coating shops it does not, that is itself a finding. It means nobody knows which floors made money. Which means the pricing was never tested. Which means the earnings you are being shown are an accident rather than a system.

2. Where the work came from

Get lead source for the last two years. You are answering one question. How much of this came from the owner personally?

Work that arrived through a marketing channel, a Google profile, a website or a referral program transfers. Work that arrived because a builder has had the owner’s cell number for nine years does not, whatever the purchase agreement says. This is the number one reason a bought coating business underperforms its last P&L, and you can know it in advance if you ask.

3. Whether the crew stays

In this trade the crew is a big part of the asset. A trained installer who knows the systems and the local slabs is hard to replace. An experienced crew is why the daily rate is what it is.

Find out what they are paid and how. Whether the structure is sustainable. Whether anyone has an agreement. And, carefully and at the right stage, whether they plan to stay. A deal that assumes the crew stays and does not is a deal for a trailer full of equipment.

4. The equipment, honestly

Hours on the grinder. Condition of the dust extraction. Age of the tooling. What got maintained and what got run until it complained. Equipment in a photo looks the same at year two and year nine.

Check what is owned, financed or leased too. A list of assets that turns out to carry payments changes the deal.

5. Warranty obligations

The one specific to coating, and the one buyers forget. Floors installed before you owned anything can fail after you do. A coating that lifts next spring was caused by prep done under the old owner, and the customer will call the business, not the person.

Find out what warranties were issued, on what terms, on how many floors. Then settle in writing who carries them. This is an attorney question and it is worth the hour.

6. Licensing, insurance and claims

Whether licensing was in order. Whether it transfers or has to be reapplied for in your name. Insurance claims history. Any open disputes. Licensing often does not transfer at all, so confirm you can legally work on day one instead of assuming the license came with the sign. See how coating licensing works.

If you are on the other side of this

The same list, read backwards, is a plan for making your own shop worth something.

What raises the value of a coating business is how well it runs without you.

• Written pricing that somebody else can apply and get the same answer. A pricing system in your head is worth nothing to a buyer.
• Job level cost history. A buyer who can see which floors made money is buying a known quantity. One who cannot is discounting for the risk, and you pay for that discount.
• Lead sources that are not you. Marketing channels, a profile with reviews, a referral program. Anything where the work arrives at the business instead of at your phone.
• A crew that runs jobs without the owner on site.
• Clean records. Licensing current, insurance continuous, warranties written down, change orders in writing.

Here is the convenient part. Every one of those is also a better way to run the shop while you own it. The systems that make a business sellable are the same ones that make it less exhausting on a Tuesday, and they are what one system for the whole business is for.

The first ninety days after you buy

Three priorities, in this order. Resist the urge to redecorate first.

1. Keep the crew and the customers. Nothing else matters if either walks. Meet the crew early. Be straight with them about what changes and what does not. Then personally call every active customer and open account.
2. Cost the first twenty jobs yourself. Do not assume the old pricing was right. Material, hours, overhead, against the invoice, on every floor. It is the fastest way to find out what you actually bought, and it usually surprises people in one direction or the other.
3. Change one thing at a time. A new owner who changes the pay structure, the pricing, the system and the schedule in the same month cannot tell which change caused what. He has also given a nervous crew four reasons to leave at once.

Common questions

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