What Helps Drive The Value of Your Construction Business?

Some Key Takeaways from the National Construction Financial Management Association (CFMA) 2016 Conference “Building it Forward”

Gilmore Jasion Mahler CPA and Partner Bob Bobek knows the construction industry. Not only has he advised countless construction clients over the years, but he’s very active on a national and local level with the Construction Financial Management Association (CFMA).  A recent speaker at CFMA’s 2016 national conference “Building it Forward” in San Antonio, Texas, Bob shares key takeaways from his presentation on treasury management. Our focus here is on valuing your construction business. It’s about more than just your earnings or your equipment. Are you attractive to a potential buyer? They’ll be looking for a healthy company and specifically these key components:

A good balance sheet: Focus on assets: working capital to equipment.

Synergies: Efficiencies gained through combining companies. For example, a general contractor that works regularly with an electrical subcontractor could consider buying that subcontractor and absorbing it into their business. By self-performing the electrical component, it can make you more attractive to potential buyers.  

Look at market perceptions of risk:  Do a self-assessment:

  • How’s your safety record?  
  • How big is your business? The bigger contracts you have the more appealing you are to a potential buyer.
  • Types of contracts: Do you have reoccurring contracts? Are you in “hot” sectors like power, water and energy?
  • Is your management team strong and secured?
  • What’s your growth potential?
  • What’s your succession plan? If you’re bringing in younger talent and have a plan in place, the market will perceive your company as lower risk.
  • Are you union or non-union? General contractors who use union labor have a perceived higher risk in light of challenges with union pension liabilities.
  • Are you a larger company with greater diversity when it comes to geography, capabilities and customers?

Looking at these key issues can help better position your company so that when the right buyer does come along, you’re ready.

Bob Bobek, CPA is a partner in the audit and accounting department of Gilmore Jasion Mahler with over thirty years of public accounting experience and leads our Construction Specialist Team. He is a member of the Ohio Contractors Association, The Associated General Contractors of America and the Construction Financial Management Association, where he has held several offices.

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