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
Thriving with a Difficult Manager
In the ideal situation, everyone would have a great manager - both internally and externally. In the real world, we will all have to work for someone we consider a difficult manager. Learn to thrive in these situations.
Related Article
A Typical Project - Project Profitability and Understanding the Basics
It is crucial for everyone in a construction company to understand the financial basics of a project. Contractors have razor-thin profits and relatively high risk.
Related Article
5-Step Foreman Coaching Outline
Accelerating the development of foremen is one of the most critical things a contractor can do to improve project outcomes and mitigate the craft labor shortage. This 5-step outline will form the foundation of a great coaching program.
Related Article