Is Your Tile & Stone Installation Business Ready to Sell?

Pull together your Profit & Loss statements, balance sheets, and tax returns for the last three fiscal years. Work with your CPA to restate financials on an accrual basis if you've been filing on a cash basis, and remove personal expenses — vehicle personal use, owner health insurance, family salaries — with a clear add-back schedule. Buyers and their lenders, especially on SBA 7(a) deals, will scrutinize these documents heavily. Inconsistent or commingled records are the single fastest way to depress your perceived EBITDA and kill deal momentum.

Generate a spreadsheet showing annual revenue by customer for each of the past three years, including the customer name, project type (residential remodel, new construction, commercial), and your primary contact. Flag any customer exceeding 20% of annual revenue — buyers will immediately probe concentration risk, and having the data ready, along with context about the relationship depth, demonstrates professionalism and reduces buyer anxiety. If one or two GCs drive more than 40–50% of your revenue, use the next 6–12 months to actively diversify your customer mix.

Pull every state and local contractor license your business holds and confirm renewal dates, bonding limits, and named insured details. Determine which licenses are tied to you personally versus the business entity — licenses tied to the owner personally do not transfer and will require the buyer to obtain their own credentials post-close, which can delay project starts and spook buyers. Also confirm your general liability, workers compensation, and commercial auto policies are transferable or replaceable without a gap in coverage at closing.

Run a search on open workers comp claims, any mechanic's liens filed against projects you completed, and unresolved disputes with subcontractors or material suppliers. Buyers will conduct lien searches and review your insurance loss runs — surprises in this area signal poor risk management and give buyers leverage to renegotiate price or structure at closing. Close out or formally settle any open items before going to market, and document the resolution in writing.

Create a backlog report listing every committed project, including the customer name, contract value, deposit received, scheduled start date, estimated gross margin, and project type. Buyers will want to understand not just revenue booked but quality of that revenue — signed contracts with deposits are worth significantly more in a buyer's eyes than verbal commitments or unsigned proposals. Include a column showing gross margin per job so buyers can see your margin profile across residential, commercial, and renovation work.

Create a formal add-back schedule that identifies every non-recurring, personal, or discretionary expense flowing through the business — personal vehicle use, owner travel, family member salaries above market rate, one-time equipment purchases, or legal fees unrelated to operations. Each dollar of legitimate add-back increases your adjusted EBITDA, which directly multiplies into valuation. Have your CPA or M&A advisor review the schedule for defensibility, because buyers and SBA lenders will push back on any add-back that appears aggressive.

The most common reason tile and stone installation businesses sell at the low end of the valuation range — or fail to close — is that the estimating process lives entirely in the owner's head. Write out step-by-step how you measure a job, how you price tile, stone, and labor by project type, how you handle change orders, and how you track actual versus estimated costs per job. If you use estimating software, document the workflow. If you're doing it on spreadsheets or paper, create a replicable template. This single deliverable does more to reduce buyer concern about owner dependency than almost anything else.

Identify your 2–4 most critical crew leads or field foremen — the people who run jobs, manage subcontractors, and maintain quality standards in your absence. Before you go to market, approach them about their long-term interest in staying with the business. Buyers will make crew lead retention a closing condition on most deals, and discovering that your top tile setter plans to start their own company will derail a transaction. Consider structuring retention bonuses tied to 12–18 months post-close employment, funded from the sale proceeds, which gives buyers confidence and gives your team a financial reason to stay.

Document how a project moves through your business: how leads are sourced, how bids are prepared and submitted, how jobs are scheduled, how materials are ordered, how crews are assigned, how change orders are handled, and how final punch lists and customer sign-offs are managed. This doesn't need to be a 200-page manual — a clear, organized 20–30 page document with process flowcharts and checklists will demonstrate to buyers that your business runs on systems, not just the owner's institutional knowledge.

Pull a full list of everyone performing tile and stone installation work for your business and confirm their classification as either W-2 employees or 1099 independent contractors. Misclassified workers are a significant liability in specialty trade acquisitions — state labor departments and the IRS have been increasingly aggressive in auditing contractor classifications. If you're operating with a primarily 1099 workforce on work that would likely fail IRS classification tests, begin transitioning key workers to W-2 status before going to market. Buyers will either discount the price or walk away entirely when they discover unresolved classification exposure.

Gather every master service agreement, preferred vendor agreement, subcontract framework, or supplier relationship document you have with your top general contractors, residential developers, and commercial construction clients. If relationships are informal, consider reaching out to your top 3–5 GC contacts to formalize a preferred vendor arrangement or letter of intent to continue work post-sale. Buyers pay for relationships — but only if those relationships are documented and demonstrably transferable.

Create a complete asset list including every tile saw, wet saw, angle grinder, mixing station, scaffold system, vehicle, and trailer you own or lease. For each item, note the year, condition, estimated remaining useful life, and any deferred maintenance. Buyers will conduct a physical inspection and may hire a third-party equipment appraiser for SBA deals. Deferred maintenance discovered during due diligence typically results in dollar-for-dollar price reductions. Address any critical equipment issues proactively and have service records available.

If you or your crew leads hold NTCA membership, CTI (Certified Tile Installer) credentials, or manufacturer-authorized installer status from suppliers like LATICRETE, Schluter, or Dal-Tile, compile these certifications in a single document. If you're close to qualifying for NTCA membership or CTI certification, pursue it before going to market. These credentials differentiate your business from uncertified competitors, signal quality standards that transfer to a new owner, and are particularly valuable when pursuing commercial or luxury residential specifications.

Not all business brokers understand construction and specialty trade businesses. Engage an advisor who has closed deals in the specialty contractor space — they will know how to normalize your financials for a construction business, how to position your backlog and customer relationships, which buyers are actively looking at tile installation businesses in your market, and how to structure a deal that protects your tax position. Ask any broker you interview about their last 3–5 closed transactions in the trades and whether they have relationships with SBA lenders who fund contractor acquisitions.

Commission a formal valuation from a Certified Business Appraiser (CBA) or have your M&A advisor prepare a detailed valuation analysis based on your adjusted EBITDA, comparable tile and stone contractor transactions, and your specific value drivers and risk factors. Many owners dramatically underestimate or overestimate what their business is worth. Going to market with an unrealistic asking price wastes time and creates stigma around the listing; going in underpriced leaves real money on the table. A formal valuation also helps you understand what specific improvements — like diversifying your customer base — would do to your number.

Work with your M&A advisor to produce a Confidential Information Memorandum — typically a 20–40 page document that presents your business to qualified buyers under NDA. For a tile and stone installation business, the CIM should include your business history and market positioning, your adjusted EBITDA bridge, your customer revenue breakdown, your crew and equipment overview, your backlog summary, and your growth opportunities. A well-prepared CIM signals seller seriousness and dramatically shortens the time buyers spend on initial analysis, accelerating the deal timeline.

Buyers and their SBA lenders will want to know how institutional knowledge transfers from you to the new owner. Write a 90-day post-close transition plan that covers customer introduction visits with your top 5–10 GC accounts, crew lead introduction and relationship handoff, estimating system training, supplier account introductions, and any ongoing project management support. Sellers who approach the transition proactively reduce buyer anxiety, shorten the required post-close employment period, and often negotiate a shorter, better-compensated transition — rather than an open-ended consulting obligation.

The difference between an asset sale and a stock sale, and the allocation of purchase price across equipment, customer lists, non-compete agreements, and goodwill, can have a $100K+ impact on your after-tax proceeds. Before you go to market — and certainly before you accept any Letter of Intent — consult with a CPA or tax attorney who has experience with small business M&A transactions. Understand the tax treatment of any seller note, earnout payments, and non-compete income, as these are taxed differently than goodwill proceeds.