The contracting industry is a critically important economic engine, providing millions of jobs and generating billions in value. However, whether you own a large, global construction business or a smaller, local operation, the industry can present significant challenges. Running a modern contracting firm requires mastery of a variety of moving parts. Sourcing deals, servicing clients, managing workforces, and handling cost overruns and delays can all present a stiff test for even the savviest owner.
For business owners who have put in the hard work and navigated those challenges, exiting the company on their own terms is the ultimate reward. However, this too can present its own risks. If you want to get the best possible price – and a sale timeline that works for all involved – it’s imperative to do your due diligence ahead of time.
Selling a Contracting Business
Contracting businesses come in many forms, including new construction, home improvement, HVAC, roofers, concrete and foundation specialists, and water and energy technicians. However, no matter the type of contractor, the principles of an effective business sale remain the same.
With this in mind, let’s take a closer look at the key steps to follow when pursuing a contracting business sale.
Establishing an Accurate Value for Your Contracting Business
Making an accurate assessment of a contracting firm’s value extends beyond a simple tallying of assets and subtraction of debts and liabilities. There are countless other factors that significantly impact valuations. These include the reputational value of the company, the existing market dynamics (is it a buyer’s or seller’s market?) and other more finely tuned assessments.
For many contracting business owners, it’s difficult to properly make this valuation, as they lack both the experience and necessary market context. In fact, many owners may not even know which key elements of the assessment to look for. In a scenario such as this, you risk creating an imbalance that favors potential buyers – and you will ultimately lose well-deserved money.
By partnering with a professional business broker, contractors can ensure that they receive full and fair value for their company. A broker has a sophisticated understanding of local market dynamics as well as the skill and experience necessary to create a fully informed valuation model. This professional assessment considers both hard data and intangible values, such as business reputation, employee skills, repeat customer value, and more. All such considerations can play a significant role in arriving at the true market value of a contracting company. Unfortunately, far too many sellers fail to maximize these intangible assets.
Organizing All Key Financial Data
No seller wants to see a potential transaction derailed halfway through the process – especially after expending significant time, energy, and financial resources. To prevent this from occurring, it’s crucial to organize all of your financial information.
This means ensuring that all business records are accurate and available. Buyers will want to examine a comprehensive history of assets, debts, and other key financial metrics. It is important to disclose all financial information even if it is not flattering to the company. You have an obligation to be transparent when making disclosures, and potential buyers may become suspicious if the numbers appear “off” in some fashion.
Timing Your Sale
Often, a business owner’s personal prerogatives influence the timeline of a sale. However, if possible, it’s wise to wait to sell until your contracting business is in a strong position. If your company is flourishing (with a talented staff, robust sales and profit margins, etc.), it’s going to look that much more attractive to potential buyers.
This means you’ll likely want significant lead time for the sales process. Additionally, you’ll need to plan ahead by compiling your business history, all financial records, and a sales portfolio. Having all of these materials ready to go can help maximize the odds of a timely and successful transaction.
Finding the Right CT Business Broker Firm
If you want to sell a contracting company quickly and for its full value, it makes sense to seek help from a professional. After all, while you might be an expert at running a successful contracting business, you probably don’t have an extensive background in business sales.
That’s where a qualified and experienced business broker will prove invaluable. By working with the right broker, you can streamline the sales process and optimize your return. A business broker will help you:
- Arrive at a true and fair valuation that includes intangible values.
- Identify and target potential buyers.
- Bring an expert’s skill and perspective to negotiations.
- Avoid costly and unnecessary errors that can derail the sales process.
While working with a business broker firm offers a range of important benefits, not all brokers have the same level of experience or market expertise. The firm you choose should have long-term credibility, a track record of successful deals, and specific knowledge of contracting business transactions. These three elements are vital – without them, you may not reach your desired outcome.
Why VR New Haven is the Right Business Broker for Your Contracting Company
At VR New Haven, we have extensive experience selling contracting firms of all sizes. We also have specific expertise in a range of niches within this category. The following are just a few of the segments we specialize in:
- Home Improvement
- Foundation and New Home Construction
- Real Estate Development
- Building Material Suppliers
- Excavation and Landscaping
- Specialized Industrial Construction
- Infrastructure and Heavy Construction
- And Many More…
As a top business broker in CT, we’re dedicated to helping you maximize the value of your business. We follow a simple, transparent 9 step sales process to ensure your transaction is swift, painless, and rewarding. Click here to view the other industries we have business sales experience in.
If you’re interested in selling your contractor business, VR New Haven can help. For more information about our services, or to speak with one of our brokers, contact us today!