Ownership Transition - Key Seller Risks

Whether you are buying a construction business or selling one, it is important to understand the perspectives of the other party, including what their major risks are.

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D. Brown Management
December 23, 2018 2 minute read
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In general, each party will tend to discount the risks and concerns of the other and that impacts the ability to create the best deal.  

Succession: Key Ownership Transition Risks the Sellers Side.

The biggest seller risks are:

  • Doing nothing or moving too slowly is the biggest danger given today’s changing construction industry and shortage of executive level talent. 
  • If not done with the right levels of timing, education, and communication, the process is likely to demoralize the team and impact performance, and therefore, value.  
  • Following any internal demoralization, the ability to attract great talent will become impacted.  
  • Banks and sureties will start to look at their risks very differently if the business does not have a clear succession plan, especially as the owner(s) get into their late 50’s.  
  • If it is an asset sale, the current owner(s) must be able to roughly quantify the existing risks and how to mitigate them. 
  • Valuing and selling the business for too little, therefore not capturing the value they have created during their period of ownership. 
  • Since most sellers will be financing or earning out a portion of the sell price, they have significant risk around whether the business will be able to continue to generate the cash flow required.  
Ownership Transition - Key Seller Risks
Continue building value in your business, yourself and your key team members with a good succession strategy....
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