Contractor Exit Strategy 3 of 6: Strategic Sale to an Outside Buyer

Every contractor wants a strategic sale to an outside buyer.

D. Brown Management Profile Picture
Share

Specifically, an outside buyer that sees such a strong strategic fit with their business that they are excited to pay a 6X earnings multiple of the best performing year the contractor has had during the last three years in cash. 

Succession: Exit Strategy 3 of 6 - Strategic Sale to Outside Buyer.

Fact: Most media coverage of deals is either a strategic sale or a catastrophic liquidation through bankruptcy. This can skew a contractor’s view of the market.  

Fact: Only a small percentage of ownership transitions could be considered strategic sales with high valuation multiples.

Fact: The only way a high valuation makes sense for the buyer is if the contractor has either a competitive position, technology, or process that can be scaled up significantly with access to more capital or other operational assets the buyer has. The ROI (Return-on-Investment) still must pencil out for the buyer.  

Fact: Few contractors have truly built highly scalable competitive advantages that make this type of exit an option.  

Fact: If you have truly built scalable competitive advantages that require more capital to execute then an outside strategic buyer is your only option.  


Succession
Continue building value in your business, yourself and your key team members with a good succession strategy....

Succession
Continue building value in your business, yourself and your key team members with a good succession strategy....

Contractor Exit Strategy 5 of 6: Sale to Management
Contractor Exit Strategy 5 of 6: Sale to Management. A very common exit strategy for contractors and one that might be integrated with passing the business down to family or used when there is no family involved in the management of the company.
Levels of the Value Stream
For contractors to unlock maximum value during business development, preconstruction and project execution it is critical to understand the broader value stream of the project beyond their scope. 10 levels of granularity in the construction value stream:
Positioning for the Best Talent
Contractors are in an all out war for talent. The winners will be those contractors that master recruiting, retaining and development at both the craft and leadership levels.