Matt Jackson·April 4, 2024

Roofing + Florida = Path to $100m | Matt Jackson Interview

Matt Jackson left a career in mortgage banking, corporate financial planning, and Morgan Stanley wealth management to buy United Systems Inc. (USI), a Tampa-area Florida commercial roofing company specializing in spray-foam roofing and coatings, in 2022. He deliberately chose roofing over more crowded home-services trades like HVAC and plumbing because private-equity competition there had pushed multiples up; he bought USI at roughly 2.75x EBITDA on about $5m revenue, using an SBA loan, a 401k ROBS rollover, personal equity, a partner's equity, and an unusual 5% "limited guarantor" (a licensed but non-investing roofer) to satisfy Florida's licensing requirement since neither buyer held a roofing license. The bulk of the episode is a granular breakdown of the commercial roofing industry in Florida: spray foam as a high-barrier, high-margin niche; the huge untapped referral network of property managers, insurance agents, and GCs; Citizens insurance's 15-year roof-replacement rule driving structural demand; and the operational realities of running a trades business, including replacing a key 30-year technical employee, decoupling estimating from sales, and managing a workforce with its own HR quirks. Jackson's growth thesis is aggressively organic rather than roll-up-driven: he aims for five offices across Florida each generating $10-20m in revenue within five to nine years, a potential path to $50-100m, banking on the sheer size of the Florida roofing market and the reputational/referral edge of good customer service rather than on digital marketing or acquisitions.

Deal facts

multiple: ~2.75x EBITDA
sde ebitda: ~10% EBITDA margin on $5m revenue (roughly $500k)
revenue: $5m at purchase
financing structure: SBA loan + ROBS (401k rollover, 22.5% equity) + personal equity (22.5%) + partner equity (45%) + 5% limited guarantor (licensed roofer, no capital, pledged for 5% of principal) + seller consulting arrangement (originally structured as $300k seller financing/employment contract, renegotiated to $100k/year 1-year contract with non-compete voided if not renewed)
notes: Seller (Jeff) offered to reduce price by $300k in exchange for a 3-year, $100k/year consulting/sales role; this had to be renegotiated because SBA didn't like it, so contract term was cut to 1 year with a conditional non-compete. Neither buyer nor his partner held a Florida roofing license, so they brought in a 5% limited guarantor (a licensed, retired roofing contractor and friend of the seller) who contributed no capital but is on the hook for 5% of the SBA loan principal in a default; SBA did not require the business to actually be licensed in his name before closing. Buyer used a ROBS (rollover for business startups) from his 401k for part of his equity injection, partly for a Roth-conversion tax-efficiency play on eventual exit, not because he needed the capital.

Why this business

Matt Jackson was a Morgan Stanley financial advisor who learned about ETA/SBA acquisitions and ran the numbers on typical home-services trades (plumbing, electrical, HVAC, roofing). He found that plumbing/HVAC/electrical already had heavy private-equity interest pushing multiples toward 5-6x, while roofing had far less buyer competition and could be bought around 2.5-3x, giving a much higher unlevered return. He specifically targeted Florida because of the sheer size of the roofing market there (driven by hurricanes and the state's Citizens insurance requirement that flat roofs be replaced or re-roofed every 15 years) and because he wanted to move back to Florida from Chicago. Within roofing, he was drawn to United Systems (USI) because of its spray-foam roofing niche, a technically demanding, high-capex ($150k+ minimum equipment, manufacturer certifications required) segment with very little local competition, which he saw as a defensible toehold and cash-flow base to fund expansion into conventional commercial roofing systems (TPO, metal, shingle, modified bitumen).

What's working

Spray-foam roofing niche has real barriers to entry (certifications, $150k+ equipment investment, manufacturer NDL warranty requirements) giving pricing power and limited competition
Strong existing brand reputation and inbound/referral-driven demand meant no need for digital marketing or paid ads at time of the interview
Massive addressable market of untapped referral relationships: seller only had relationships with ~12 of Florida's ~1,800 property managers, plus emerging insurance-agent and government-GC referral channels
Being reachable and responsive (staffed phones, 24-48 hour dispatch for repairs) differentiates them from competitors in a fragmented, underserved commercial market
Citizens insurance policy clarification on foam roofs (allowing repair/"scarifying" instead of full tear-off) turned a perceived headwind into a tailwind mid-episode
Partner is a strong sales closer, complementing the buyer's finance background
Recent uptick in inbound private-equity interest validates the original thesis that roofing was underpenetrated by institutional capital

What's hard

Neither buyer nor his partner held a Florida roofing license, requiring a creative (and unusual) 5% limited-guarantor structure to satisfy the SBA/licensing requirement
Seller wanted an unusually long, detailed LOI (9 pages, closer to an APA) which slowed the deal down, contrary to typical ETA advice to move fast on LOIs
Original seller financing/consulting arrangement had to be renegotiated because the SBA did not like the initial structure
Had to let go a 30-year veteran key employee who had deep technical expertise but didn't fit the culture; the employee's expertise made the decision feel "held hostage" until Matt built a bench of alternative candidates
Estimators currently must have two very different skill sets (technical estimating/takeoffs and sales), which is a bottleneck; considering decoupling into an assistant-estimator role
Commercial roofing margins compress significantly on larger projects, forcing ongoing pricing decisions
Roofing crews and hiring pool can include serious behavior/reliability issues (industry lore of violence, no-shows, substance issues) even though this business itself hasn't had major incidents
Determining organic growth (replicate playbook in new geographies) vs. inorganic bolt-on acquisition strategy is still unresolved; original platform-plus-bolt-on thesis has shifted toward organic office expansion
Labor supply dynamics in the Florida Panhandle (labor flowing in from other states, depressing prices) make that region unattractive for expansion

Notable quotes

I could actually do an LBO using the SBA and create my own, you know, be pretty much fully invested in private equity but I actually own all the equity, like how awesome is that, right?

If I'm buying at a 5, 6x multiple, right, that's giving me what a 20% earnings multiple. If I'm buying at 5x, versus if I can buy something at 2 and a half to three, now I'm closer to 35, 33%. So from a math perspective I liked roofing.

I asked him, you know, through a due diligence process, like how many relationships with property managers do you have, and he's like, oh, about a dozen. Well, I just did a quick look up... and realized that there's about 1,800 property managers in Florida.

The one advice I would give to other acquisition entrepreneurs that are facing this decision of, we have a key employee, I know they're not the right fit for the long term, but how do I survive without this person: just interview other people, just start interviewing people.