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
Four Steps to Sustainable Growth (10+10=0)
Growing contractors face an overwhelming number of problems and opportunities as they move through the different stages of growth. Prioritizing these, aligning the team, then executing becomes progressively more difficult and important.
Related Article
The Teacher and the Student in All of Us
The rate a contractor can grow is the average speed the team learns and teaches at. We are all teachers and we are all students. There are many things that we can do to improve ourselves on both sides of that equation.
Related Article
Construction Contracting, Materials Science, and "People Science"
Psychology is materials science for people. Engineers use materials science to design and build construction projects that are both safe and meet the needs of their owners. Organizational Development is the engineering of individuals into effective teams.
Related Article