Issue 4 of 9: Financial Partners

Construction Ownership Transition Issue 4 of 9: Are Your Financial Partners, including Bank and Surety, Onboard with the Transition?

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Succession: Ownership Transition Issues - Number 4 Financial Partners. Construction is a cash-intensive business. Ownership transitions require even more cash.
  • Engage them very early in the process to understand what they are looking for. Because they see this a lot, they often have great advice for owners making transitions. 
  • Start building the relationships with the management team early.
  • Get a good understanding of the capital and collateral that will be required to be left in the company for the bank, surety, and insurance.  
  • Build these requirements into your financial model of the transition and build some cushion in because things will never go as planned.
  • If a personal guarantee will still be required from the current owner(s) for a period of time, set a value for what that guarantee will be worth for them if they are willing to take that risk at all. This will typically be a percentage for what is guaranteed paid annually.  
  • Depending on the exit strategy, this may or may not be that big of an issue, but the financial partners are one of the major stakeholders in the transition. 

Issue 4 of 9: Financial Partners
Continue building value in your business, yourself and your key team members with a good succession strategy....

Issue 4 of 9: Financial Partners
Continue building value in your business, yourself and your key team members with a good succession strategy....

Succession Fact #3: Trust Between Parties
Succession Fact #3: No exit strategy or deal structure will work without trust between all major stakeholder groups. Whether it is a large and complex project or a business ownership transition, there will never be a “perfect” set of documents or plan.
Weekly Percent Planned Complete (PPC) and Project Performance
Improving the project planning and delivery process starts with improving predictability around the schedule. Nearly every Superintendent and Foreman is familiar with the Short-Interval-Plan (SIP) and typically fill one out weekly looking ahead 1+ weeks.
Preconstruction - Adding Value from the Perspective of the Architect
Getting involved early in the project as it is being developed is one of the best things a contractor can do for profitable growth. Effective precon services will achieve the design the architect wants within the budget the project owner needs.