What is a painting contractor worth?

A painting contractor’s hard assets, such as vans, ladders, sprayers and lift equipment, can be priced second-hand, and they may say little about what separates one painting business from another. A useful question is whether revenue will still arrive next season without the current owner. So ask about people and paperwork too: who sells the jobs, who runs the crews, which customers come back, and what is written down. This guide covers what to ask about, what to probe and how earnings are recast. It is general information, and it does not put a number on any business.

Repeat work is the scarce part

Ask how much income comes from one-off projects such as a house, a unit turnover or a tenant improvement, where each job ends and the next has to be won, and how much from standing arrangements such as a multi-year repaint contract with a property manager or a commercial landlord. If a seller points to such contracts, read them: the term left, whether either side can end them early, and whether they can be assigned to a new owner. A contract that cannot move to the buyer is worth little to the buyer, however good it looks in the seller’s numbers. BDC tells sellers they won’t get full value if they are not maintaining their equipment or there is a customer concentration risk, so ask whether one property manager or builder supplies much of the work and how the equipment has been kept.

Who sells and who paints

Two questions test how dependent a painting contractor is on its owner. The first is estimating: if the owner prices and closes every job, the buyer is purchasing the owner’s phone as much as the business. The second is the crew. Ask who leads each site, how long they have been there, and whether anyone besides the owner can quote a job from start to finish. Where the answer is no, ask how that should be reflected, in price or in structure. Written estimating methods, a template for scopes of work and a second estimator are worth asking about.

Seasonal cash and older-building work

If the business does exterior work, ask how revenue splits across the year and how the business pays its crews through the slow months. Older buildings raise a separate question. Ask a contractor who works on older properties to show how it handles the possibility of hazardous materials in existing coatings or surfaces. A written protocol, training records and past job files are evidence. Ask what their absence would mean for risk that you would inherit on continued work.

Recasting earnings

Ask whether earnings have been recast: the seller’s pay, personal vehicle costs and one-off items can be adjusted so a buyer can see what the business earns under normal management. The glossary entries on add-backs and normalization explain the mechanics. In painting, check that the owner’s own labour on site is treated the same way as the wage a replacement foreman or estimator would be paid. If the owner paints and estimates, a buyer would still need to cover both roles, so check that the recast shows that cost.

Differences to compare between similar contractors

• One has repaint contracts that can be assigned; the other has only residential jobs that end with the work.
• One has a second estimator and a foreman who runs sites; the other depends on the owner for both.
• One keeps job files and a written protocol for older buildings; the other relies on memory.
• One runs under a franchise banner whose agreement lets the buyer take over; the other is an independent with no brand beyond its own name.

What sits on the other side of the table

BDC notes that a business purchase loan is meant to finance an existing business with revenue and an established client base, and that financing can extend to goodwill and client lists, so ask a lender which of these points it will want evidenced. The Canadian Federation of Independent Business warns that poorly managed ownership transitions may lead to a premature sale. That is a reason to prepare the points above well before any listing, not a prediction about any one business. BDC also says the final selling price can be affected by factors such as market conditions, the buyer’s strategic interests, due diligence, the availability of financing, the seller’s eagerness to sell and the seller’s involvement after the transaction. For broader context, see what a trades business is worth.