Contractor Exit Strategy 3 of 6: Strategic Sale to an Outside Buyer

Every contractor wants a strategic sale to an outside buyer.

D. Brown Management Profile Picture
Share

Specifically, an outside buyer that sees such a strong strategic fit with their business that they are excited to pay a 6X earnings multiple of the best performing year the contractor has had during the last three years in cash. 

Succession: Exit Strategy 3 of 6 - Strategic Sale to Outside Buyer.

Fact: Most media coverage of deals is either a strategic sale or a catastrophic liquidation through bankruptcy. This can skew a contractor’s view of the market.  

Fact: Only a small percentage of ownership transitions could be considered strategic sales with high valuation multiples.

Fact: The only way a high valuation makes sense for the buyer is if the contractor has either a competitive position, technology, or process that can be scaled up significantly with access to more capital or other operational assets the buyer has. The ROI (Return-on-Investment) still must pencil out for the buyer.  

Fact: Few contractors have truly built highly scalable competitive advantages that make this type of exit an option.  

Fact: If you have truly built scalable competitive advantages that require more capital to execute then an outside strategic buyer is your only option.  


Succession
Continue building value in your business, yourself and your key team members with a good succession strategy....

Succession
Continue building value in your business, yourself and your key team members with a good succession strategy....

Build Your Most Valuable Asset
There are five main value levers that contractors can pull to truly increase the value of the business as measured in long-term return on capital and valuation during a succession.
Cash Flow Tip 7 - Schedule-of-Values
Having a good SOV and billing format will set you up for cash flow success throughout the project.
The Truth About Business Development
There are way more potential customers than you think and most don't even know who you are. That's your biggest challenge and your biggest opportunity.