Common seller tricks in fencing
Sellers will point to a full install calendar without showing whether those jobs were bid before a steel or cedar spike, and whether deposits cover the materials.
- A large sold-but-uninstalled backlog bid at old material prices.
- Deposits sitting in the operating account as if they were profit.
- Wood or vinyl warranties that will fail on you after the first hard season.
- The lead installer as a one-person production department.
- A ‘commercial division’ that is really one general contractor.
Which numbers to verify
Split residential and commercial, and materials versus labor. Ask for the backlog with bid dates, material assumptions, and deposits held. Reconcile those deposits — they are a liability. Look at whether margins held when steel, cedar, or vinyl moved. Recast the owner’s estimating and on-site hours.
Licensing and key-person risk
Contractor licensing and, often, permit and HOA rules are part of the job. Some commercial and highway work needs specific insurance or prequalification. Confirm you can pull permits in the same jurisdictions on day one, and that any dealer or distributor agreements transfer.
Equipment and condition
Post-hole equipment, skid steers, trucks, and trailers are the plant. Look at hours and whether augers or track machines are worn out. A yard lease for staging materials should be assignable; if it is month-to-month, that is a risk. Inventory should be counted at current replacement cost, not wishful cost.
Seasonality and the calendar
Ground that is frozen or soaked stops installs. Spring and early summer can be overloaded. A buyer who inherits a winter backlog of ‘spring installs’ needs a crew and a cash plan, not just a calendar. Ask how much work actually got done in the last two first-quarters.
Customer concentration
Builders, property managers, or a single commercial contractor can dominate. Retail residential is more spread out but depends on reviews and a closer — often the seller. Get the mix and the top-account percentages.
Questions to ask before you make an offer
- Please list sold-but-uninstalled jobs with bid dates, material assumptions, and deposits held.
- How did margins change the last time steel, cedar, or vinyl prices moved?
- What share of revenue is residential retail versus builders or commercial accounts?
- Which installers will stay, and what is the backup if the lead leaves?
- May I see the yard lease and any personal guaranty?
- What permits, licenses, or distributor relationships have to be in my name?
- How are warranties handled, and what callbacks occurred in the last two years?
- May I inspect trucks, trailers, and digging equipment, including liens?
- Are any customer deposits unspent on materials that have already risen in price?
- After an LOI, may I speak with your accountant and your lead installer?