How to Sell a Construction Business
After years in construction, you're ready to move on to the next phase of life, whether that's retiring or trying your hand in another industry. You're investigating how to sell your construction company and you want to make sure you do it right. That means getting the best price for the company and choosing a buyer who will do what it takes to keep the company running and maintain its success.
If you're wondering where to start when selling a construction business, Synergy Business Brokers is here to help. We facilitate the sale of your business, helping you value it correctly and connecting you to qualified buyers.
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Working With Experienced Construction Business Brokers
Choosing an experienced construction business broker lets you find a buyer for your company more quickly and ensures that you get the right price for your business. A business broker who knows the industry can also help you make the best choices for your company's future. It could be that you sell now but stay on with the company through the transition period. Alternatively, the best option might be to sell your business and move on immediately.
Synergy Business Brokers has more than a decade of experience facilitating construction company sales throughout the US. We've worked with companies in the following areas of construction:
- Interior Construction
- Underground Construction
- Exterior Construction
- Building Materials Business
- Environmental Services
- Home Improvement
- Architectural Firms
Check out our case studies for more details on how we've guided business owners through the sale process. For example, we worked with the majority owner of AAES Engineering, Inc. who was in his 60s and was ready to transition into retirement. The minority partner was 50 and the owners decided that the best option would be to sell the business and have the minority owner work for the new acquiring company. We received multiple offers on the business. The best offer was from a large construction company with multiple offices that wanted to expand its capabilities to provide engineering services. The construction company provided an employment agreement for the minority partner and the terms of the deal that satisfied all parties.
In another instance, we worked with the owner of American Concrete Pumping. The business provides commercial and residential concrete pumping to build floors, walls, and foundations. The owner was looking to retire and reached out to us. We marketed the business and found many suitable buyers, one of which was the right match for the owner.
We've also worked with heating and cooling companies. For example, we found a buyer for Interstate Heating & Cooling when the owner was ready to sell. The company works with residential and commercial customers and performs around 600 installations annually and HVAC service and repair. The buyer wanted to expand their reach in New York and agreed to have the business owner remain on salary and commission with the company for a year after the sale. It took about four months to close the deal.
How to Sell Your Construction Business
Selling a construction business is a multi-step process. The more you prepare your company for the sale, the smoother the transition will be. Follow these steps on how to close a construction company to achieve the best possible result.
1. Pricing a Construction Business
The first step is determining your business's value and deciding on a price. When pricing the company, you want to be like Goldilocks — the price shouldn't be too high or too low, but just right to attract the most potential buyers.
You can use several methods to value and price your business. The simplest way is to subtract its liabilities from its assets but that's not reflective of the true value of your company. You can also value your business based on its income or projected revenue. A company with more significant income-earning potential will likely have a higher valuation than one with limited income or a few projects in the pipeline.
Some people take a market-based approach to valuing construction businesses. They use the sale price of similar-sized companies to determine the potential value of their own business. The market-based approach can be helpful but doesn't always work, because every business is different and some sales are private, so not all sales are reflected to discover the price of a similar company.
2. Cleaning Up The Details of a Construction Operation
Along with pricing your company, you must organize and clean up its financial information before presenting it to potential buyers. Just as you would clean up your home before guests came over, you want to organize your company's records and books before buyers take a look at them.
Cleaning up your operation is a multi-pronged process. First, you want to organize your paperwork. Have your company's tax returns ready for others to view, put together your profit and loss statements and other financial statements and make your credit history clean and clear.
Next, it's a good idea to either pay off any debts the company has or pay them down as much as possible. This way, the newer owner won't have to take on a substantial amount of debt.
A construction business broker can guide you through the clean-up process and help you decide what to do so your company can put its best foot forward.
3. Removing Yourself from Your Construction Company
Try to step away from the business bit by bit before you sell it. In some cases, owners are closely linked to their construction businesses. Once the owner steps away, the business can collapse. It's worth gradually removing yourself from business operations as you prepare to sell. Stepping away will let the buyer see that the company can continue to operate without you guiding it or having a hands-on role.
4. Contacting a Professional Business Broker
Working with a business broker who knows the construction industry can help you sell your company more quickly and for the best price. You want a broker that will market your company effectively. Look for a broker with connections in the industry and a good idea of the demand for construction companies.
Your broker can also guide you on how to move through the transition. It could be that staying with the company for a few months or a year makes sense, or it might be best to make a clean break from the business after selling a construction company.
Fine-Tune Mergers and Acquisitions in the Construction Industry
Mergers and acquisitions are other options for business owners who want to sell their construction companies.
Acquiring companies or merging with competitors allows construction businesses to grow more quickly. They can move into new markets or begin offering new services when they acquire or merge with other companies. Finding a company looking to expand its footprint or increase its profitable growth quickly can be a good option when it's time for you to sell your business.
Contact Synergy Business Brokers to Sell Your Construction Business
If you're ready to sell your construction company or would like more information on the process, Synergy Business Brokers can guide you through it. We have numerous five-star reviews from satisfied business owners and have won multiple awards for top business brokers in the country. Contact us today to see how we can streamline the sale of your business, helping you get the best price and terms when you sell.