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

Every contractor wants a strategic sale to an outside buyer.

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D. Brown Management
November 24, 2018 2 minute read
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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.  

This Series (7 of 45)
Contractor Exit Strategy 1 of 6: Winding Down or Liquidation Contractor Exit Strategy 2 of 6: Pass Down to Family Contractor Exit Strategy 3 of 6: Strategic Sale to an Outside Buyer Contractor Exit Strategy 4 of 6: Merger with a Similar Contractor Contractor Exit Strategy 5 of 6: Sale to Management
This Series (7 of 45)
Contractor Exit Strategy 1 of 6: Winding Down or Liquidation Contractor Exit Strategy 2 of 6: Pass Down to Family Contractor Exit Strategy 3 of 6: Strategic Sale to an Outside Buyer Contractor Exit Strategy 4 of 6: Merger with a Similar Contractor Contractor Exit Strategy 5 of 6: Sale to Management
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