Several of my construction company BIZCOACH clients are getting to the point where they’re thinking about exiting or retiring in the next few years. Every construction business owner will exit their company at some point in their life. They’ll either sell, transfer to their children or employees, close it, or die and leave it to their heirs.
But what’s their company really worth? In order to sell your company to an outside buyer or transfer it to your employees, eventually you’ll have to determine the fair market value. The fair market value can be the current net equity, or more if it has traits that will attract investors or buyers.
What attracts buyers?
Most construction companies are not sellable!
A construction company that’s been in business for many years, makes a nice profit, and is run by a strong owner does not make a valuable business. A company only has value when buyers or investors are willing to pay money to purchase the company. Buyers don’t want to buy a company in which they’ll have to continually run the company, manage operations, supervise people, estimate projects, order materials, sell work, and spend sixty hours a week in the office. Buyers want to buy a business that runs itself and spits out a large positive net profit without their everyday involvement.
Buyers want future profit growth potential.
Investors want to make a big return on their investment, and they want the return to grow every year. They also want a company run by a strong accountable management team that’s not dependent on the owner to keep it going and moving to the next level. They also want competitive advantages, loyal customers, and a track record of steady growth and profits. And they want structure, systems and controls in place.
How can your company become more valuable?
To help you determine what your company needs to do to become more valuable or sellable, email GH@HardhatPresentations.com to take the ‘BIZ-BUILDER Value Improvement Test.’