This business is at the core of the American dream. Owners, workers, investors, have made and lost fortunes in this line of work. It also may be one of the oldest skills and documented proof of human evolution and ingenuity. That continues to this day… Let’s see what a construction business is worth… People come to me to know what their biggest asset (their business) is worth. I am here to share tricks of my trade so you can use them to increase your business’ value. Construction is one of the largest industries in the US. Its annual revenue is $1.7 trillion; spread over 700,000 businesses, and employing over 7 million people.Construction is at the epitome of human achievement, perseverance, and demise.
Rule of Thumb – A rule of thumb is really not a rule. It is more of a guideline. It will help you understand the business from an appraiser’s perspective. If you are looking for specifics, comment below and I will put you in touch with a business broker or an expert in my network.
The value of a construction business can vary from 0.20-0.30x of annual revenue or 3-5x of EBITDA. What affects where you are in the range?
There are FIVE FACTORS that smart buyers look for and pay big money for
- Size,
- history,
- backlog,
- financial strength, and
- the business cycle.
