A construction company can be very profitable, but if you are thinking of selling your business, first you have to make it look attractive to potential buyers. In order to do that, you have to gather all positive aspects from your firm and not hide the negative ones.
A construction business valuation have to be fair and transparent, as most of it are bigger companies, with a very big number of employees and huge amounts of money.
For those who are looking to sell their construction companies, one very effective way to sell it for the best price is to make it look the more profitable and attractive as possible. In order to do that, even though you are thinking of selling your business you must run it like it will last forever.
In this post, you will learn how to make the best valuation for your construction business.
What is your Construction business worth?
In order to know exactly what your business is worth, you have to start by making the math. Compile every finance report from the past years and gather it to a major report to provide your potential buyers with it.
Make sure you have the answers for all the metrics below:
- What are the sales?
- What is the profit?
- What are the growth trends?
- What is driving new sales and is that sustainable?
- What channels do new customers come from and what is the breakdown of each channel?
- What is your market position?
- Is your Location favorable?
- How reliant is the business on the owner?
- What systems and processes are in place to run the business?
What makes a Construction business worth more?
There are some aspects that can make your construction business worth even more. So you also have to take into account all investments you have done throughout the years, the number of employees you hired, the clients you conquered and so on.
But there are some specific aspects that will help to make the correct valuation and cover everything you need before setting your asking price. Take a look at the metrics below:
- Predictable key drivers of new sales
- Stable or growing traffic from diversified sources
- Established suppliers of inventory with backup suppliers in place
- Traffic stats
- High percentage of repeat visitors and repeat sales
- Clean legal history
- Brand with trademark, copyright or legal concerns
- Documented systems and processes
- Growth potential
What does the average Construction business sell for?
There has been only 46 construction business sales in the past ten years in the United States. However, if you look at the chart, you will see that, despite the small number of sales in this specific market, the companies are very, very profitable.
Average sales price, for example, is up to $2.1 million, with an average multiple of 3, which means that construction businesses usually take three times more profit than the total amount in gross income.
What is the most frequent deal size?
Most frequent deal size is somehow the same as average sales price. It means that if you are thinking of selling your construction business, it’s very likely you will take $2.1 million from the sale as well.
Is the Construction market getting bigger?
2015 was the best year since 2010, but it’s too soon to say that construction market is getting bigger or smaller. But speaking of average sales price, it’s very possible to say that, despite all odds, it’s a very good moment for selling a construction business.
Are bigger businesses worth more?
Yes. The higher the business the bigger the profit you will get from your construction company’s sale, with few exceptions. But the average multiple, as you can see in the chart, shows how profitable construction business can be.
What states have the most business deals?
Are you wondering where the most deals were made throughout the country, or if your state has a hot market to sell fast? As you can see if you are located in Connecticut or Florida, you may get a lot more offers than if you are in Rhode Island or Minnesota. But sometimes you can overcome the low number of deals with investors or competitors looking to enter a specific new area, and get lucky with an offer!
Why would you sell in the first place?
The reason to sell always varies from each person. Maybe you are looking for new challenges, businesses and opportunities, or you just want to enjoy your family and retire. Although it can seem tempting to get your hard worked cash, make sure that you are clear on the motives so you don’t regret afterwards.
How long will it take to sell your Construction business?
If you have read all the necessary steps to understand your valuation, and think you have focused on all the topics that make your company worth more, it is maybe time to start the process. Selling your business is a long-term process, and doesn’t happen overnight. Usually companies sell in 12 months, but you can also see deals getting closed in 6 to 9 months depending on the opportunity.
What is the process of selling your business?
This step by step process will help you get less confused when you make sure you are ready and confident to let go of your business, and perform a nice and positive sell. Many entrepreneurs forget about a step, or just don’t have the right guidance to know all the stages necessary and get lost through the process. Don’t forget to go through all of these, and if you have any questions, comment at the end of the article or contact us for more help.
Who will buy your business?
If you are wondering about the buyers that can be interested in your Construction, don’t worry, there are many options and possibilities. From First Time entrepreneurs, to businessmen interested in new opportunities, the chances are that in the construction industry it may likely be a person who already had a store in the field.
Construction businesses are one of the most profitable in the United States, but there are some aspects you can highlight in order to make it even more valuable. Despite that, construction companies owners may get $2.1 million from its sale — both average sales price and most frequent deal size.
If you want to start accelerating your buyout process, fill out our free valuation form and get your business valued today! Leave your comments on any doubts or feedback, we are glad to hear your thoughts.