--- title: "Roofing Due Diligence Checklist for Sellers (2026)" description: "The complete due diligence checklist roofing sellers receive after LOI signing. Financial, customer, license, HR, IT, legal, lead-source concentration, and 1099 classification request lists. Sourced." slug: "roofing-due-diligence-checklist" canonical: "https://mainstreetwealth.ai/resources/roofing-due-diligence-checklist" collection: "resources" collection_name: "M&A Resources & Insights" author: "Sukhrobjon Ismoilov" category: "exit-strategy" date_published: "2026-06-09T15:00:39.956Z" date_modified: "2026-06-09T15:00:40.155Z" token_estimate: 2766 source: "https://mainstreetwealth.ai/resources/roofing-due-diligence-checklist.md" --- # Roofing Due Diligence Checklist for Sellers (2026) > The complete due diligence checklist roofing sellers receive after LOI signing. Financial, customer, license, HR, IT, legal, lead-source concentration, and 1099 classification request lists. Sourced. **Author:** Sukhrobjon Ismoilov **Published:** 2026-06-09 **Updated:** 2026-06-09 **Canonical:** https://mainstreetwealth.ai/resources/roofing-due-diligence-checklist This is the seller-side diligence-request list a roofing owner can expect to receive after signing an LOI. It complements our [roofing business exit strategy](/resources/roofing-business-exit-strategy) (a 12-month preparation roadmap) and our [sell-side data room checklist](/resources/sell-side-data-room-checklist) (the platform-agnostic data-room structure). For the broader cluster, start with our [roofing industry overview](https://mainstreetwealth.ai/industries/roofing). For closed-deal patterns, see our [recent transactions](https://mainstreetwealth.ai/case-studies/). > **Headline:** A typical roofing buyer due diligence package contains **80 to 140 line items** with two heavy-emphasis areas unique to the trade: **lead-source concentration** and **1099 sales-rep classification risk**. Sellers who prepare the package before going to market close **30 to 60 days faster** than sellers who build it during diligence. ## How to use this list Diligence is run from a **virtual data room** (VDR), typically Datasite, Intralinks, Firmex, or SmartRoom. Buyers expect: 1. **Tier 1 documents** in the VDR before LOI signing. 2. **Tier 2 documents** within 7 to 14 days of LOI signing. 3. **Tier 3 documents** as confirmatory diligence proceeds. The full diligence sprint typically runs **45 to 75 days** from LOI signing to definitive-agreement signing. ## Section 1: Financial diligence ### Tier 1 (in the data room before LOI) - Last 3 fiscal years of audited or reviewed financial statements - Trailing 12 months (TTM) financial statements - Year-to-date interim financials, broken out by month - Sell-side Quality of Earnings (QoE) report - EBITDA bridge from GAAP net income to adjusted EBITDA, with each addback documented - **Multi-year normalized EBITDA**: 3-year and 5-year averaged EBITDA with storm-event isolation ### Tier 2 (within 14 days of LOI) - General ledger detail for the past 36 months - AR aging report (insurance-claim AR vs. retail AR, separately) - AP aging report (with distributor terms documented) - Inventory ledger - Bank statements for the past 12 months - Most recent business and personal tax returns (last 3 years) - Working capital schedule (90-day historical and projected) ### Tier 3 (confirmatory) - Forward-projected 24-month financial model - Capex schedule (last 3 years actual + 3 years planned) - Debt schedule with all loan documents - Lease summary - Storm-event P&L: revenue, cost, and gross margin associated with each major hail / wind event in trailing 5 years ## Section 2: Customer and revenue diligence (the lead-source overlay) This is the most heavily diligenced section in roofing, because lead-source concentration is the single largest valuation risk. ### Tier 1 - **Lead-source attribution table.** Every customer in past 36 months with: lead source (door-knocker / Google LSA / retail referral / insurance-direct / commercial maintenance / repeat customer), close date, contract value, payment status. - Customer master list with: name, location (ZIP), service category, contract type (insurance vs. retail), revenue, completion date. - Recurring/maintenance contract waterfall (24 to 36 months). ### Tier 2 - Top-25 customer contracts (especially commercial maintenance accounts) - Customer concentration analysis (top-10 % of revenue, lead-source-weighted) - Insurance carrier preferred-vendor program status and documentation ### Tier 3 - Storm-event revenue / lead-source bridge - Customer satisfaction data (NPS, Google reviews, BBB, complaint log) - Refund / cancellation log for past 36 months ## Section 3: License and regulatory diligence ### Tier 1 - State residential / commercial roofing licenses (every state of operation; note that many states do not require a separate roofer license, see our [roofing business broker in Georgia](/resources/roofing-business-broker-in-georgia) for a state-by-state walkthrough) - Local municipal contractor permits and bond documentation - Insurance carrier preferred-vendor program memberships ### Tier 2 - License-violation history (past 7 years) - State contractor-board correspondence (past 5 years) - OSHA citation history (past 5 years) - DOT compliance records for fleet over 10,001 lbs gross vehicle weight - Local municipal compliance documentation by metro ### Tier 3 - Confirmation letters from primary state regulators - Cleanup of any open compliance items - Insurance carrier preferred-vendor renewal documentation ## Section 4: HR and personnel diligence (with the 1099 reclassification overlay) This section has a roofing-specific overlay because of the 1099 sales-rep model. ### Tier 1 - Org chart with names, titles, departments - Headcount table by department (24-month history) - Compensation schedule: salary, hourly, commission structure (especially 1099 sales-rep commissions) - Benefits summary ### Tier 2 - Employee handbook - All employment agreements - All non-compete and non-solicitation agreements - **Independent contractor (1099) agreements with full classification analysis.** This is often the most-scrutinized HR document in roofing diligence. Buyers will look for: agreement language, payment terms, training programs, equipment ownership, exclusive vs. non-exclusive relationships, and termination provisions. - **1099 reclassification reserve / litigation history.** Document any prior IRS or state DOL investigations. - Workers' compensation policy + experience modifier (X-Mod) - Any open employment-litigation matters - I-9 file audit confirmation ### Tier 3 - Performance review structure documentation - Crew foreman tenure and headcount stability (24-month) - Salesperson retention and pipeline concentration ## Section 5: Operations and crew diligence ### Tier 1 - Service-area map: every project plotted, by ZIP / metro - Crew structure: W-2 vs. 1099, foreman count, average crew size - Standard operating procedures (SOPs): job estimation, supplement workflow, installation protocols, post-install QA ### Tier 2 - Vehicle titles for all owned fleet - Vehicle lease agreements for all leased fleet - Fleet maintenance log (12-month) - Material distributor relationships (Beacon / QXO, ABC Supply, GAF / Owens Corning / CertainTeed pro programs) ## Section 6: Legal and corporate ### Tier 1 - Articles of incorporation / formation - Operating agreement / bylaws - All amendments to governance documents - Cap table with all equity holders - Schedule of subsidiaries ### Tier 2 - All material contracts (suppliers, software vendors, marketing partners, manufacturer dealer agreements, insurance carrier preferred-vendor contracts) - Open and threatened litigation (past 7 years; roofing has higher litigation incidence than other home-services trades) - IP schedule - Insurance certificates: GL, professional liability, auto, workers' comp, cyber, employment practices, **excess/umbrella coverage** (roofing typically requires higher umbrella limits than other trades) ## Section 7: IT and software stack ### Tier 1 - CRM / project-management platform: AccuLynx, JobNimbus, RoofSnap, CompanyCam, or other - Accounting platform: QuickBooks, NetSuite, etc. - Marketing platform: Google Ads, Local Service Ads, manufacturer co-op marketing - Communications: phone/SMS/IVR provider, drone software (DroneDeploy, etc.) - Cybersecurity: MFA enforced, password policy, last vulnerability scan ### Tier 2 - Data ownership and export rights for each major platform - Cybersecurity insurance certificate - Customer data privacy policy ## Section 8: Tax ### Tier 1 - Last 3 federal tax returns - Last 3 state tax returns ### Tier 2 - Sales-and-use-tax registration in every state of operation - Property-tax filings for owned facilities - Payroll-tax compliance documentation - Any open IRS or state-tax matters - Section 197 amortization schedules ## Section 9: Industry-specific items - NRCA (National Roofing Contractors Association) membership - Manufacturer dealer-level certifications (GAF Master Elite, Owens Corning Platinum Preferred, CertainTeed SELECT ShingleMaster, Atlas Pro Plus, etc.) - Local roofing-association memberships (e.g., FRSA in Florida, GARCA in Georgia) - Better Business Bureau profile and rating - Customer-review profiles: Google, Yelp, BBB, Houzz ## Common diligence pitfalls in roofing 1. **Storm-event concentration.** A single hail event drives 60%+ of trailing-year revenue. Buyers normalize multi-year and discount aggressively. Avoidable by building diversified retail / commercial maintenance revenue. 2. **1099 sales-rep classification.** Heavy 1099 mix invites IRS reclassification risk. **This is the single most-common roofing-specific diligence issue.** Buyers will price the risk into the offer or escrow proceeds. Avoidable by W-2 conversion of senior reps before going to market. 3. **Top-customer concentration.** Especially insurance-carrier or commercial-customer concentration. Concentration above 25% may trigger EBITDA discounts or earnouts. 4. **Insurance-claim AR aging.** Older than 120 days is a flag. 5. **Distributor passthrough costs not normalized.** Post-QXO/Beacon, buyers diligence material-procurement discipline aggressively. 6. **Lien / mechanic's-lien history.** Old mechanic's liens filed against your customers can surface in commercial diligence; document any and remediation taken. ## The clean takeaway - **The diligence list is long but predictable.** Owners who prepare the package before going to market close 30 to 60 days faster. - **Lead-source attribution is the single most-scrutinized document in roofing diligence.** Get it right. - **1099 sales-rep classification is the second-most-scrutinized item.** Convert senior reps to W-2 before going to market. - **Multi-year normalized EBITDA is the third-most-scrutinized item.** Storm-event isolation is non-negotiable. - **A specialized advisor maintains the data room.** See our [roofing industry overview](https://mainstreetwealth.ai/industries/roofing). ## Primary sources - [Forbes M&A Partners - The Roofing Business Boom](https://forbes-partners.com/the-roofing-business-boom-how-to-maximize-value-when-selling/) - [PitchBook News - Valor's Add-On the Latest in PE's Roofing Deal Spree](https://pitchbook.com/news/articles/valors-add-on-the-latest-in-pes-roofing-deal-spree) - [QXO - Beacon Roofing Supply Acquisition](https://qxo.com/news/) - [Verisk - Roof Claims Topped $30B in 2024](https://www.carriermanagement.com/brand-spotlight/verisk/verisk-roof-claims-topped-30b-in-2024-driven-by-wind-and-hail-losses/) - [Insurance Information Institute - Convective Storm Losses](https://insuranceindustryblog.iii.org/convective-storm-losses-hit-historic-three-year-streak/) - [BLS - Roofers Occupational Outlook Handbook](https://www.bls.gov/ooh/construction-and-extraction/roofers.htm)