Thinking About Selling to Private Equity?

5 QUESTIONS TO ASK YOURSELF

Do you own a business, or a job?
If your company can’t run without you for 30 days, a buyer won’t pay much for it. You need a real management team: foremen, a project manager, an estimator who can carry the load. Having this in place isn’t just good for a future sale; it’s good business now.

Are you in service work, or purely construction?
Private equity favors recurring, predictable revenue: maintenance contracts, service agreements, repeat commercial accounts. New construction work is project-by-project and harder to value. If you have a service side, it helps. If you don’t, it’s worth considering. Buyers will also look closely at customer concentration. If a large percentage of revenue comes from one general contractor, owner or developer, that can affect valuation and deal structure.

Are your financials clean?
Tax returns aren’t enough. You need three to five years of proper financial statements, ideally reviewed by an outside CPA. More importantly, personal expenses need to be out of the business books. If the numbers don’t hold up under scrutiny, the deal won’t either.

A Quality of Earnings (Q of E) report from a reputable CPA firm is the gold standard. It reduces buyer risk, which increases what they’re willing to pay.

Do you know your number?
Don’t get caught up chasing EBITDA (Earnings Before Interest, Tax, Depreciation and Amortization) multiples you heard about secondhand. Instead, ask yourself what you actually need from the sale. Set that as your floor. Walk away if you can’t hit it. Everything above it is a win.

For many family-owned contractors, the biggest question isn’t just price; it’s legacy. What happens to your people, your culture and your company name after the sale matters too. Not every buyer is the right fit.

Do you have representation?
Private equity buyers do this every day. Most owners do it once. That’s a big imbalance. Hire an M&A advisor or investment banker who knows the contractor market. Their fee is almost always recovered — and then some — in a better final offer. SMACNA Greater Chicago can be a good starting point for referrals to advisors with trades experience.

BOTTOM LINE
Whether you’re five years away from retirement or simply exploring options, preparing your business now creates more flexibility later. The contractors commanding the strongest valuations today aren’t just profitable; they’re organized, scalable and built to operate beyond the owner.