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.  


Contractor Exit Strategy 3 of 6: Strategic Sale to an Outside Buyer
Continue building value in your business, yourself and your key team members with a good succession strategy....

Contractor Exit Strategy 3 of 6: Strategic Sale to an Outside Buyer
Continue building value in your business, yourself and your key team members with a good succession strategy....

5T Evaluation of Alignment for a Person and a Role
Your growth will either be constrained or unlocked based on how effective you are at getting the right people into the right roles - including yourself. Learn what 5 basic categories you should start with.
Increased Value by Lowering Variability
A construction business is capable of providing a very high return to the owners who have their capital at risk as well as the team members that work there. Contractors with lower variability in profitability are both more valuable and more sustainable.
Aligning Projects and People
The business of building is largely about aligning projects and people. Contractors exist to build projects. People design and build the projects. The management team, structure, and systems bring it all together.