Know exactly what to verify before buying a fence installation business generating $1M–$5M in annual revenue.
Find Fencing Company Acquisition TargetsAcquiring a fencing company offers access to a fragmented, cash-generative trade business with strong local brand value. However, buyers must rigorously verify owner dependency, equipment condition, seasonal cash flow patterns, and licensing before closing. This guide walks through every critical diligence phase.
Confirm the true earnings power of the business by analyzing adjusted cash flow, revenue mix, and customer concentration across residential and commercial segments.
Obtain three years of tax returns and P&Ls. Add back owner salary, personal vehicle expenses, and non-recurring costs to confirm SDE of $300K–$500K minimum.
Confirm no single customer exceeds 20% of revenue. Flag heavy reliance on one GC, HOA, or property manager, which creates post-close retention risk.
Map monthly revenue over 36 months. Identify off-peak gaps and confirm the business has sufficient working capital or credit lines to bridge slow periods.
Evaluate the physical assets, crew structure, and operational systems that generate revenue and determine whether the business can run without the selling owner.
Review all trucks, trailers, post drivers, and tools. Confirm ages, maintenance logs, mileage, and outstanding liens. Budget for any deferred capital expenditures immediately.
Determine whether estimating, customer relationships, and field supervision depend solely on the seller. Identify any lead estimator or project manager who can transition responsibilities.
Request documented SOPs for bidding jobs, material takeoffs, and customer onboarding. Absence of documented processes signals high transition risk and owner dependency.
Verify all contractor licenses, bonding, and insurance are current and transferable. Uncover any outstanding claims, warranty disputes, or subcontractor liabilities before closing.
Review state and local contractor licenses, surety bonds, and certificates of insurance. Confirm they are current, transferable to a new entity, and meet commercial contract requirements.
Audit all subcontractor agreements for proper 1099 classification. Misclassified workers create significant post-close tax and labor liability for the buyer.
Request a list of all open warranty obligations, material supplier liens, and customer disputes. Any unresolved claims should be settled or escrowed at closing.
Verify the Fencing Company acquisition qualifies for SBA financing, the purchase price is supportable by the verified cash flow, and the deal structure protects the buyer's downside.
Confirm the Fencing Company meets SBA 7(a) eligibility requirements: the business is for-profit, U.S.-based, within SBA size standards, and the buyer meets personal financial requirements. Some industries have specific SBA restrictions — verify before LOI.
Model verified normalized EBITDA against projected SBA loan payments at current rates. A $1M SBA 7(a) loan at 10.5% over 10 years costs approximately $13,000/month. The Fencing Company must generate at least 1.25x debt service coverage after a market-rate manager salary to pass underwriting.
Confirm the seller note is properly subordinated to the SBA loan and goes on 24-month standby as required by SBA rules. If an earnout is included, define exact measurement metrics, time period, and dispute resolution process before signing the purchase agreement.
Before signing a Letter of Intent, request these documents from the seller. Missing or incomplete items are a red flag — not a reason to proceed without them.
Fencing companies typically sell at 2.5x–4.5x SDE. Stronger multiples are earned by businesses with documented SOPs, diversified commercial accounts, and tenured crews that reduce key-man risk.
Yes. Fencing companies are SBA 7(a) eligible. Buyers typically inject 10–20% equity with a seller note of 5–10% to cover any appraisal gap and satisfy lender requirements.
Owner dependency combined with undocumented estimating processes. If the seller is the only person who prices jobs and holds customer relationships, post-close revenue retention is at serious risk.
Request a full asset list with purchase dates, mileage, and maintenance records. Have a qualified mechanic inspect trucks and post drivers. Any deferred maintenance should be credited against the purchase price.
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