After years as a contractor, you may be ready to move into another life stage, whether it’s retirement or a different occupation. You may be wondering how to sell a construction company safely and properly, which means getting the highest possible price and picking a buyer who will keep the company going. This is what you need to know about selling your construction business.
There are multiple steps in the sale of a contracting business. The more prepared you are as an owner, the easier the switch will be. Our team of business brokers in Austin will walk you through the process from start to finish, facilitating the sale by valuing the business correctly and putting you in touch with qualified buyers.
In the sections below, we will offer some tips to ensure a successful sale.
Get an Accurate Valuation
Successful sales begin with comprehensive, accurate valuations, which yield an asking price for a construction business. To produce this figure, we will begin by researching the market prices of comparable businesses. A proper valuation takes time to create, and it will include information about various parts of the company. Brokers consider the following factors when valuing a construction business:
- Property owned by the company.This includes real estate and intellectual property such as copyrighted architectural plans.
- Equipment.A brokerage will assess the condition of the company’s construction equipment.
- Customer information.It’s impossible to arrive at an accurate valuation without information on the company’s clients. That information will, of course, be kept confidential.
- The brand itself.We will factor in the company’s online presence as well as its brand identity.
- Current and predicted revenue
- Comprehensive financial records
- The company’s management team and crewmembers
- Physical location
- The success of the company’s past marketing efforts
- Safety records (history of serious accidents)
- Information on past and pending litigation
A great deal of information goes into the process, but it’s all needed to arrive at a fair asking price. Count on our experts to dig deep and find the data needed for a successful valuation.
Make the Company More Appealing to Potential Buyers
Along with valuing the company, an owner will need to assemble and reconcile its financials before presenting the information to potential buyers. Just as one would tidy up their home before guests arrive, a construction business owner would organize their records before putting the company up for sale.
Organizing a contracting business’ records is a multifaceted process that starts with the arrangement of paperwork. Tax returns, profit and loss statements, and credit histories will go a long way toward reassuring uncertain buyers. Finally, it’s a good idea for an owner to take an honest look at their equipment. Will the new owner find it to be in good shape? This is certainly a discussion to have with your business broker before any large equipment purchases. This is one example of what you need to know about selling your construction business.
An experienced business broker can help you through this process and ensure that the company puts its best face forward. Contact us today to learn how our business brokerage can find the right purchaser and increase the chances of a sale.
Remember That Timing is Everything
The right time to get out of the construction business is when profits are rising, not when sales have slowed down. Some owners opt to sell when their health or that of their company has declined, but that’s not always the best strategy. No matter when you sell, keep in mind that, the more accurately you describe the business to your business broker, the more likely it is that it will sell.
Maintain a Respectful Distance
Before putting the company up for sale, consider distancing yourself from its daily operations. Hands-on ownership is a good thing, but it puts a business at risk when the owner decides to step away. By gradually pulling back before the sale, you’ll show the buyer that the company will do just fine without you.
For an owner who wants to reduce his or her role, mergers and acquisitions are another viable option. Acquiring and merging with competitors allows construction companies to grow rapidly, enabling them to move into different markets or offer new services. Finding other owners who want to expand their companies’ footprints is a great strategy when it is time to sell a construction business.
Consider an Internal Sale
Internal sales are another way for owners to get out of the construction business, and they can be quite lucrative when executed properly. There are two options, including ESOPs (employee stock ownership plans) and direct sales, with both approaches offering increased flexibility and business continuity. A business broker can, after reviewing the business’ financials and considering other factors, determine if an internal sale is the right strategy for your company.
Contact a Business Broker
Working with a business brokerage that knows the industry will help an owner sell their company faster and for a better price. It’s important to find a brokerage with industry-specific marketing strategies as well as professional connections and an awareness of the demand for these companies.
Aside from getting clients the highest possible prices for their businesses, brokers can also guide them through the transition. Whether you’re staying on in an advisory role or making a clean break, a business broker will recommend the right strategy for the company and its buyer.
Is It Time to Sell?
The decision to get out of a business that you’ve worked hard to create isn’t an easy one but selling doesn’t have to be difficult or painful. The team at CGK Business Sales is here to help contractors at every step, from valuation to closing. We are proud to help our clients sell their construction businesses for the highest amounts, in the shortest length of time, and with the least risk possible. This article was only part of what you need to know about selling your construction business now or in the future.
We have finalized dozens of transactions for clients in the construction industry as well as numerous others, and we would be honored to put our experience to work for your company. Request additional information via our online form or call today to find out how our team can put any business in front of potential buyers from across the country and around the world.