6 Common Exit Strategies for Contractors

Contracting is a capital-intensive and risky business with potentially volatile profit margins.

D. Brown Management Profile Picture
D. Brown Management
November 20, 2018 2 minute read
Share

The construction business is also amazing, with the owners making a good return on their capital. Management teams and employees earn a great living while building projects they can be proud of that will last for generations.

Succession: Six Common Exit Strategies for Contractors. Liquidation, Pass Down to Family, Strategic Sale to Outside Buyer, Merger with Similar Contractor, Sale to Management, Sale to Employees.

The majority of contractors are privately owned by a small group of people who are usually also managing the business. 

Over time, those owners need to: 

  • Reduce how much time they spend in the business
  • Get their capital out of the business
  • Reduce their risks

There are 6 common exit strategies for these owners:

  1. Wind Down / Liquidation
  1. Pass Down to Family
  1. Strategic Sale to Outside Buyer
  1. Merger With Similar Contractor
  1. Sale to Management
  1. Sale to Employees (ESOP)

Each of these strategies has different dynamics for the net valuation amount, time, and risk. Not every strategy is available to or right for every contractor.  

We will explore each of these in more detail with future posts to help you identify which might be best for your situation.  

6 Common Exit Strategies for Contractors
Continue building value in your business, yourself and your key team members with a good succession strategy....
Previous Next Go To Series
Related Insights Series
6 Common Exit Strategies for Contractors
Continue building value in your business, yourself and your key team members with a good succession strategy....
Previous Next Go To Series
Related Insights Series
Principled Leadership Versus Prescriptive Direction
Where is your comfort zone? What are your tendencies? What's the right balance? Build more effective teams, projects, and construction business by understanding these differences in people and role requirements.
Related Article
Contractor Business Model: Evolution with Stages of Growth
As a contractor navigates the different stages of growth, the complexity of their business model evolves, including their organizational structure, management systems, and people. Seeing this model visually helps identify bottlenecks and constraints.
Related Article
The Toolbox of a Leader
Contractors know how important it is for their crafts people to have a toolbox (and bags) full of well maintained tools. As a leader in a construction business you must build your own toolbox.
Related Article