When it comes to acquisitions, construction and contractor businesses often find themselves overlooked, burdened by misconceptions and stigmas. The prevailing belief is that these businesses are cyclical, riskier than their manufacturing counterparts, and heavily reliant on the owner’s presence. However, our experience as construction business brokers at Pacific Business Sales has shattered these preconceived notions, revealing the true potential of construction companies as excellent acquisition opportunities.
Our expertise in selling construction and contractor businesses has unveiled a wide range of profitable enterprises boasting consistent revenue and earnings over the years. These businesses have defied the stereotypes associated with the industry and have proven to be great acquisitions for savvy buyers. In fact, many of the construction companies we’ve sold showcased higher-than-average margins, steady growth, and a reduced dependency on the owner for day-to-day operations.
One common misconception surrounding construction businesses is that acquiring them through SBA financing is a challenge. In reality, this is merely a myth. Almost all of our construction business sales have utilized SBA financing successfully. While it’s true that some banks may be hesitant to finance construction company acquisitions, many others are more than willing to extend their support. At Pacific Business Sales, we collaborate with several SBA PLP (Preferred Lender Program) banks, providing seamless access to SBA financing for acquiring construction companies.
Additionally, one notable advantage of acquiring construction businesses is the comparatively lower cost. While manufacturing companies and other industries typically sell for 3 to 4 times DE (Discretionary Earnings), construction companies are more attractively priced at 2.5 to 3 times DE, with larger companies slightly higher.
Characteristics of an Ideal Construction Company for Acquisition:
A construction company well-suited for acquisition shares the same desirable attributes as any other acquisition target. It should exhibit a healthy level of operational independence from the owner, boast good profit margins, a diversified customer base without high customer concentration, and a proven track record of stable revenue and earnings. Surprisingly, many construction businesses outperform their more popular industry counterparts, making them attractive acquisition targets.
Mid-sized construction companies with over $2 million in sales often embody these sought-after characteristics more consistently. With a larger staff and established infrastructure, these companies exhibit greater stability than their smaller counterparts, a trait applicable to businesses across various industries.
For ambitious buyers willing and capable of nurturing growth, small construction companies present an excellent opportunity. These businesses often lack marketing efforts, relying solely on referrals and repeat business. With the right buyer at the helm, a small construction company can experience exponential growth and success.
Explore Our Construction Businesses for Sale and Discover Our Successful Transactions:
At Pacific Business Sales, we proudly present a diverse portfolio of construction businesses available for acquisition. Our track record of successful transactions in the construction industry speaks volumes about the potential of these businesses as valuable additions to your investment portfolio. Unleash the hidden potential of construction and contractor businesses and embark on a rewarding journey of acquisition with our expert guidance.
Contact Us to explore the myriad of opportunities in the construction industry and make a wise investment decision today.
