Issue 4 of 9: Financial Partners

Construction Ownership Transition Issue 4 of 9: Are Your Financial Partners, including Bank and Surety, Onboard with the Transition?

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Succession: Ownership Transition Issues - Number 4 Financial Partners. Construction is a cash-intensive business. Ownership transitions require even more cash.
  • Engage them very early in the process to understand what they are looking for. Because they see this a lot, they often have great advice for owners making transitions. 
  • Start building the relationships with the management team early.
  • Get a good understanding of the capital and collateral that will be required to be left in the company for the bank, surety, and insurance.  
  • Build these requirements into your financial model of the transition and build some cushion in because things will never go as planned.
  • If a personal guarantee will still be required from the current owner(s) for a period of time, set a value for what that guarantee will be worth for them if they are willing to take that risk at all. This will typically be a percentage for what is guaranteed paid annually.  
  • Depending on the exit strategy, this may or may not be that big of an issue, but the financial partners are one of the major stakeholders in the transition. 

Issue 4 of 9: Financial Partners
Continue building value in your business, yourself and your key team members with a good succession strategy....

Issue 4 of 9: Financial Partners
Continue building value in your business, yourself and your key team members with a good succession strategy....

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