Buy A Construction Related Business



Buy A Construction Related Business

Construction-related businesses for sale

If you are looking to buy a construction-related business, or “contractor”, there are a lot of factors to consider:

Types of construction-related businesses

Below is the list of construction business categories found in our Business Brokers of Florida MLS system:

 
  • Building Renovations
  • Bridge Construction
  • Cabinet Resurfacing
  • Concrete Coating
  • Contractor Other
  • Construction Roll-Off
  • Contractor A/C & Heating
  • Contractor Aluminum Products
  • Contractor Boring
  • Contractor Cabinets
  • Contractor Carpenter
  • Contractor Ceilings
  • Contractor Coatings
  • Contractor Commercial
  • Contractor Concrete
  • Contractor Counters
  • Contractor Drywall
  • Contractor Electric
  • Contractor Fencing
  • Contractor Fireplace
  • Contractor Flooring
  • Contractor General
  • Contractor Gutters
  • Contractor Home Improvement
  • Hurricane Shutters
  • Contractor Installer
  • Contractor Insulation
  • Contractor Marine
  • Contractor Masonry
  • Contractor New Homes
  • Contractor Painting
  • Contractor Paving
  • Contractor Plumber
  • Contractor Pool
  • Contractor Refrigeration
  • Contractor Roofing
  • Contractor Sandblasting
  • Contractor Screening
  • Contractor Tiling
  • Contractor Welding
  • Contractor Windows & Doors
  • Crane Service
  • Demolition
  • Drain Cleaning
  • Driveway Sealcoat
  • Excavating/Trucking
  • Fire Damage Restoration
  • Fire Sprinklers
  • Foundation Contractor
  • Furniture Repair
  • Glass Company
  • Grout & Tile Repair
  • Handyman Service
  • Heavy Construction Parts
  • Hotel Refurbishing
  • Install Prison Equipment
  • Installation Building Equipment
  • Leak Detection
  • Lighting Contractor
  • Overhead Doors
  • Parking Lot Maintenance
  • Permitting Service
  • Pipeline Maintenance
  • Protective Coatings
  • Rigging Company
  • Roof Cleaning
  • Sheet Metal
  • Site Preparation
  • Steel Erection
  • Storm Shutters
  • Surface Preparation
  • Telecommunications
  • Tennis Court Refinishing
  • Traffic Control Supplies
  • Tub Refinishing
  • Underground Utilities
  • Waterproofing
  • Well Drilling
  • Woodworking
 

Do you have the experience, a license, or the ability to obtain a license? 

Entry into the almost all construction-related disciplines requires either a State or local license or both.  If you do not have a license, oftentimes, a seller may agree to stay on and qualify the business for a period of time and a small fee until you can obtain your license.  Some sellers are not licensed.  Either a member of their firm or friend may hold the license.  It is very important to secure this person’s license as part of the purchase agreement.  An untrained or inexperienced owner is at a competitive disadvantage.  If you lack adequate training or experience in the contracting discipline you purchase, sellers will be reluctant to hold a seller note.

What are the present industry trends? 

Construction-related industries tend to be cyclical.  They are highly competitive in down cycles and can be very lucrative in up cycles.  Construction-related industries always seem to lag about six to nine months behind the general economy.  Construction has been on the uprise since the end of the 2008 to 2012 housing bubble.  As we are presently exiting the downturn caused by the COVID-19 Pandemic, it is a cautious time to buy a construction business as uncertainty creates risk.  Risk provides opportunities for Buyers to purchase businesses at prices deflated by lowered revenues and Seller’s Discretionary Earnings (SDE) created by the downturn.  Certain construction related businesses may be better than others.  For example, remodeling tends to be less cyclical than new construction.  Therefore, industries such as plumbing, electrical, cabinets, kitchen & bath remodeling, etc. all tend to be stronger coming out of a downturn.

What are the key financial benchmarks? 

  • Construction businesses are expected to return between 1 to 2 times Seller’s Discretionary Earnings (SDE) plus inventory.
  • Most generate about $200,000 in revenue per employee.
  • Occupancy costs an average of 5.4% (rent and utilities).
  • Material costs should be between 30% to 40% of revenue.
  • Labor costs should be between 30% to 35% of revenue.

How are construction related businesses valued?

General rules of thumb for valuation include:

  • 20 to 25% of annual sales plus inventory.
  • 1 to 2 times Seller’s Discretionary Earnings (SDE) plus inventory.

Availability of financing?

Generally, third-party financing for construction-related business acquisitions is readily available.  The primary method of financing a construction-related business is SBA financing.  The SBA will generally lend up to 80% of the businesses' value on a ten-year note with variable interest set at two points above prime.  Seller financing is also prevalent, especially for businesses valued under $400,000.

To search for construction-related businesses for sale, please HERE.