Choosing a Private Equity Partner: Why the Highest Multiple Is Often the Riskiest Offer
Multiples attract attention. They get shared, compared, debated, and used as quick benchmarks for what a company might be worth. But in roofing and home services, the headline number rarely tells the full story. The highest multiple often looks appealing on the surface, yet it is usually the one carrying the most risk underneath.
This article breaks down why the biggest offer is often the least dependable one, what sits behind those inflated numbers, and how roofing owners can evaluate partners with more clarity.
1. A headline multiple is not the same as a guaranteed outcome
It is easy for any buyer to put a large number on an LOI. Closing at that number is something else entirely. High multiples often come with structures that reduce the true value of the deal once you get into diligence. Earnouts, aggressive adjustments, large rollover requirements, and low cash at close can all shrink what you actually receive. A strong offer is not the offer that looks impressive on day one. It is the offer that survives to the last day.
2. The highest offers often come from groups with the least experience
Across the roofing and trades landscape, the groups offering the largest multiples tend to be the groups with the least operational understanding of the space. They may be applying playbooks from unrelated industries or underestimating what it takes to scale a roofing business. When a fund stretches too far to “win” a deal, it usually tries to recover that stretch later through tighter oversight, reduced investment, or increased pressure on the team. A partner who overpays at the start often becomes a partner who overcorrects after closing.
3. Structure matters more than price
Two offers can have very different risk profiles even if the headline numbers look similar. A lower multiple with strong cash at close, a reasonable roll, and no complicated conditions often outperforms a higher multiple tied to future targets or unclear calculations. Roofing companies deal with weather, seasonality, and operational volatility, which means the predictability of an offer is often more important than the size of it. The structure reveals the reality. The multiple reveals the marketing.
4. Roofing volatility makes earnouts especially difficult to achieve
Unlike HVAC or plumbing, roofing can fluctuate dramatically based on storms and market conditions. A drought, a slow insurance cycle, or a temporary lull in lead flow can all impact year-end results even when the business is healthy. Earnouts tied to profitability become hard to hit, and integration costs or new systems may temporarily reduce margins. A clean deal protects both sides. A complicated earnout introduces tension long before the partnership has a chance to work.
5. The right partner will show you their track record
One of the strongest signals of a dependable buyer is their willingness to let you speak openly with the owners they partnered with before you. Good groups share references without hesitation. They want you to hear how they operate, how they communicate, and how their rollover equity has performed. If a group is reluctant to provide names, or provides names but discourages you from calling them, that is a clear sign something is off. A partner with integrity has nothing to hide.
6. The best outcomes come from alignment, not aggressive pricing
Across every roofing transaction I track, the happiest owners are the ones who chose partners based on fit, clarity, and shared expectations rather than the largest number. They focused on who could close cleanly, who respected their culture, who understood their model, and who provided a realistic path for their rollover equity. Those partnerships tend to perform well over time because both sides entered the relationship with aligned incentives and a clear vision for what comes next.
7. The real question is not who offers the highest multiple. It is who offers the right partnership.
A high multiple can be tempting, but multiples alone do not build teams, protect culture, or create long term value. What matters is how the buyer behaves once the deal closes, how they invest in people and process, and how they make decisions when things change. Roofing owners deserve a clear view of what they are signing up for, not a shiny number that disappears in diligence.
If you are evaluating offers or trying to understand how different deal structures impact your outcome, reach out. I talk with roofing owners every day who are navigating this landscape, and I am always happy to help bring clarity to the process.
