9 Ownership Transition Issues Specific to Contractors

All businesses face challenges with an ownership transition.

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There are nine interrelated issues that heavily impact contractors. 

Succession: 9 Ownership Transition Issues Specific to Contractors.

We will dive deeper into each of these over the next week:

  1. Strength and alignment of the management team (post-deal)
  1. Culture of the company - Is it prepared for an ownership succession and compatible with the new owner? Seems “soft” but is very “hard” and can destroy value quickly.  
  1. Key relationship continuity with employees, customers, and others.
  1. Financial partner alignment with banking, surety, and possibly insurance.  
  1. Cash generation capabilities.
  1. Asset vs. stock sale - who owns past liabilities, how are they quantified, and what is the tax implication?
  1. Sustainable growth strategy and plan to ensure value is created for all stakeholders.  
  1. Future direction of the construction industry and ensuring you are neither selling nor buying the equivalent of a horseshoe manufacturer and installer in 1900.  
  1. Extremely low barriers to entry for new contractors can easily create competitors out of unaligned stakeholder groups, which often destroys value.  

9 Ownership Transition Issues Specific to Contractors
Continue building value in your business, yourself and your key team members with a good succession strategy....

9 Ownership Transition Issues Specific to Contractors
Continue building value in your business, yourself and your key team members with a good succession strategy....

How Do You Prioritize?
This customer-first; projects-first focus is great in the earlier stages of development but starts to impact sustainable growth over time.
Focused Resources = Maximum Results
Contracting is a relatively low-margin and high-risk business. Contractors can’t afford to spread out their resources on projects or in their businesses. Leaders must put maximum resources behind their biggest bottlenecks or opportunities.
Profitability Trends
When you are looking at your scoreboard, remember that industry average benchmarks and single points in time only tell part of the story.