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. 

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....

Strong Leadership and a Clear Vision
The strongest leaders at all levels in construction have a clear vision of where they are headed and are relentlessly focused on achieving their goals. They align their teams tightly around the vision, goals and strategy.
Issue 6 of 9: Past Liabilities
Construction Ownership Transition Issue 6 of 9: Who Will Own Past Liabilities - Asset or Stock Sale? Not only is construction a cash-intensive business, it is also a risky one.
Asking Good Questions
The ability to ask good questions is critical for learning and development. The discipline of composing truly great questions often answers the original question you had and many more.