How to Sell a Construction Company

How to Sell a Construction Company 2019-12-30T11:18:15-05:00

The U.S. construction industry is a vital cog in the national economy. In total, the construction industry spends more than $10 trillion each year on goods and services and employs nearly 10 million people.

As you might imagine, an industry of this size features a significant number of mergers and acquisitions (M&A). For construction business owners who have spent years carefully building a profitable and rewarding enterprise, it’s critically important to exit with a timely sale at an attractive price. However, while most construction business owners are highly knowledgeable within their own industry, few understand the intricacies of selling a business. In order to ensure an exit on the best possible terms, it’s often advisable to work with a qualified business broker.

With this in mind, let’s take a closer look at the considerations involved with selling a construction firm, and how the right business broker can help expedite a successful sale.

Best Practices for Selling a Construction Business

To optimize your odds of a successful sale, it’s imperative to engage in some smart planning and undertake as much research as possible. Here are a few of the most impactful tips for selling a construction business.

  • Establish an Accurate Valuation – This is especially important for construction companies, as developing a fair estimation can be trickier than commonly seen in other business sectors. To ensure that you select an appropriate listing price, you must analyze all of your tangible and intangible assets and conduct a thorough industry analysis. Tangible assets include items such as heavy equipment and outstanding accounts receivables, while intangible assets include things like a company’s brand awareness, credibility, and reputation. In terms of analyzing the market, it’s important to conduct a review of recent construction business sales in your market to identify comparables. Ultimately, it helps to have professional guidance when taking these steps, given how unique construction business sales tend to be. The right business broker can help ensure that your valuation is high, yet reasonable, so you can facilitate a timely sale without leaving money on the table.
  • Prepare the Business for Sale – If you were selling a car, you’d make sure to wash and clean it before allowing anyone to test drive it. Selling a construction business is no different. If you want a buyer to meet your preferred terms, you need to present an opportunity that will excite and intrigue, rather than raise questions. To accomplish this, you must make sure your financials are in good order with a lot of detail so that buyers can understand what sources of revenue generate the most profit. Additionally, you should make an effort to boost sales in the 12 months prior to your listing and make sure that physical assets are in good working condition.
  • Anticipate Buyer Objections – It’s beneficial to view your company through the skeptical eye of prospective buyers. If you were buying your business rather than selling, what would give you pause about the transaction? Once you’ve settled on these objections, you can preemptively address them. For example, many construction firms are very owner centric. Buyers may be concerned that once the owner is no longer playing a central operational and strategic role, the business instantly becomes less valuable. You can assuage these concerns by offering to remain involved, either in a limited advisory capacity or a more formal role, for a pre-determined period after the sale. Alternatively, you can begin grooming an internal candidate to be your successor. This person should be willing to remain in that role post-integration.
  • Effectively Market Your Business – Even if you have some general marketing knowledge, selling a business is much more complex than simply shooting a commercial or developing an email campaign. This is where the value of a business broker really shines through. Business brokers are experts at creating the kind of marketing materials you’ll need, and they often keep databases of qualified buyers. This can be a key advantage, as it allows the sales process to be much more targeted. A good business broker knows exactly which type of buyer fits each transaction and can devote energy to making that specific connection.
  • Negotiate Favorable Terms – Everything we just said about marketing goes double for negotiations. While many construction business owners may occasionally bargain with vendors or suppliers for better terms, few have experience negotiating high-level business sales. A broker, on the other hand, specializes in negotiation and has the expertise and market context needed to know when to push and when to concede. Here’s the bottom line – if you don’t have a skilled negotiator working on your behalf, you’ll almost certainly leave money on the table. And when it comes to the company you’ve worked so hard to grow, you deserve to sell for a fair price.

Selling a Construction Business in CT

Armed with these key tips to help you successfully conclude a timely sale on favorable terms, it’s time to find an experienced CT business broker firm. Brokers can expedite your transaction by developing fair valuations, finding the right buyers, negotiating effectively, and helping sellers avoid critical errors that can derail a sale. However, there is one more vitally important point to be made – while business brokers can add a lot of value, it’s essential to find the right one.

Why? It’s simple. Just like construction firms, business brokerages vary in quality. If you work with the wrong partner, all of those benefits we’ve just discussed may have a lot less impact – or may not materialize at all.

At VR New Haven, we’ve been helping construction company owners sell their businesses on favorable terms for more than a decade. Our team of certified M&A specialists have the experience and expertise to help transform even the most complex transactions into successful sales.

If you’re in the market to sell a construction company, we urge you to reach out to VR New Haven. One of our knowledgeable agents will sit down with you to discuss your business, goals, and unique needs. We’ll also walk you through our 9 step sales process to ensure you have a good understanding of what your transaction will entail.

For more information about how to sell a business in CT, NY, RI, or MA, contact us today!