Construction and development
Construction businesses are hard to sell because most of their value is in the next project rather than the last one. Buyers see backlog, bonding capacity and a reputation that may belong to the owner. We help BC contractors build a company a buyer can value and a lender can finance.
How the money works
- Revenue is project-based, so a strong year proves less than a stable backlog
- Bonding, insurance and prequalification often sit with the owner and must transfer
- Holdbacks and progress billing make working capital large and hard to read
- Margins are decided in estimating and change orders, not on site
The moves we make
- Value on normalised margins across several years and the quality of the backlog
- Document estimating, project management and safety systems so they outlast the owner
- Plan the transfer of bonding, licences and key relationships well before closing
- Structure earn-outs around projects already won rather than vague future revenue
What buyers see in a contractor
A buyer looks past this year's revenue to what repeats: the backlog signed, the clients who return, the estimators and project managers who win and deliver work, and the safety and quality record that keeps prequalification alive. They also look at what leaves with the owner: bonding capacity, relationships with developers and the ability to price a job from experience. The more of that lives in systems and people other than the owner, the higher the value and the easier the financing.
Valuing uneven earnings
Construction earnings swing with the project cycle, so a single year tells a buyer little. We normalise across several years, separate recurring maintenance or service work from one-off projects, adjust for work in progress and holdbacks and look at gross margin by project type. Working capital in this sector is large, so the peg at closing matters more than in most industries. Buyers in BC often prefer asset deals to leave project liabilities behind, and the structure affects what the owner nets.
Development companies are different
A developer sells land, approvals and completed product, not a going concern in the usual sense. When a development company changes hands, the buyer is valuing a pipeline of sites, entitlements, partnerships and the team's ability to get projects built and sold to buyers. Those deals look more like real estate and joint venture transactions than business sales, and they run alongside your lawyer, CPA and licensed realtors. We help owners decide what is actually being sold and structure it accordingly.
Questions from construction and development owners
Can a construction company be sold without the owner?
Yes, if estimating, project management, bonding and client relationships have moved into the company and its people. If they all sit with the owner, the sale becomes a long transition with deferred payment.
How is backlog treated in a valuation?
Signed, profitable backlog supports value because it makes next year's earnings more certain. Unsigned pipeline supports much less. We separate the two and show buyers the margin expected on work already won.
Do lenders finance construction acquisitions?
They do, with more caution than for recurring-revenue businesses. Lenders want several years of statements, a credible backlog, a bonding plan and an experienced buyer. Vendor financing is common.
Start with a confidential conversation.
Tell Ali where the business is and what you want to happen next. You leave with a straight read on value, timing and the two or three moves that matter, whether or not we work together.