Selling a Construction Company

sell construction company

Selling a construction company is much more complicated than selling a regular business, in no small part because it often indicates you are ready to retire or move into another venture.

Before you sell, you need to be sure that action will support your next move – and a construction business broker can help make sure you’ve made the right decision.
If you are a construction business owner located in California with a business that generates at least $2 million in gross revenue and is ready to sell within 6 to 12 months, click on the send free inquiry button.

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Promise of Confidentiality

As a business broker specializing in the sale of construction companies in California, one of the questions most often asked by retiring business owners is how my firm can maintain confidentiality while selling a business and what security procedures we have in place to protect our clients.  After all, employees, vendors that provide credit, landlords, and others with a vested interest, want to know.

Highest Selling Value

With an incredible number of construction business owners exiting business ownership for retirement, it’s imperative that sellers make their businesses stand out from others on the market. In this article, we’ll discuss how to get the best price for your construction company in California.

Am I Ready to Sell?

What is your motivation for selling? Selling a construction company requires significant time, effort, and emotional commitment. Ask yourself, “Am I positive I want to sell or am I just thinking about the idea?” Does your spouse support selling now?

Do I Need to Pay Tax on The Sale?

A Structured Sale enables the seller to defer up to 100% of sale year taxes. Taxes can be deferred for a few months up to several years. A Structured Sale can give the Seller a lot of flexibility in managing tax payment options


If you have questions or would like more information about a specific construction company sector, call us today at (916) 570-2674 or click the link below to get started.

Sell My Construction Company

Selling a construction company can be a long and complicated process. Even with a good exit strategy in place, you will face many hurdles, lots of paperwork, and potential setbacks.

Here are 12 steps to help you learn more about how do I sell my construction company and how to make running your construction business more appealing than others on the market.


Preparing to Sell a Construction Company


1. How Motivated Are You to Sell?

Before listing your established construction business for sale, you have several questions to answer. Most of the questions apply to the construction market outlook and whether you should keep your business or list it. The questions to answer include:

  • Does it make economic sense to list your construction firm for sale?
  • Will I make more money continuing to operate the business on my own? 
  • Is the present value of the future dividends or distributions greater than what I’ll pay the construction business broker, fees, and taxes?
  • What should I do with the proceeds of the sale?
  • Will the rate of return will the proceeds pay?
  • Do the other owners and investors approve of listing the construction company for sale?

2. Documents

One of the first things a qualified buyer will want to see is your documents. It can take a while to get these in order, so it’s best to start gathering and organizing long before you put your construction business on the market.

Some of the paperwork you will need includes:

  • Tax returns and financial statements from at least the past three years
  • Different markets you serve in your business and the portions of your income that come from each market
  • A list of your ten highest volume customers and the amount you make from each
  • A list of aging accounts receivable and payable
  • A list of all the equipment in your facility, with year, make, model and serial number, and other details on each
  • An inventory list
  • Detailed information about employees (you won’t distribute this information during the initial stages of selling)


This list is by no means exhaustive. You’ll need to prepare much more before putting your business on the market. Once you find potential buyers, they may have requests for other types of documentation as well.

3. How Dependent is Your Construction Company on You?

Many boomer construction business owners have trouble delegating tasks and wind up doing much of the work themselves. While no one knows your company the way you do, it’s important to make sure your staff can carry on with the majority of your business’s functions when you’re not there.

Here are some key tips on selling your construction company.

If you are the only one who knows how to do a large part of the business, you may turn off buyers. Most construction business buyers want a turnkey company, not an investment where they will have to spend hours training employees or taking over the bulk of the work. As an added benefit, by training your employees, you are ensuring that the business can function as you transition out.

4. Processes and Operations

Many construction company owners have a system of running their business that is entirely in their heads. You know the ins and outs of your business and you are the one who keeps everything running. While this may work as long as you are with the company, a potential buyer will want to know what processes are in place.

Therefore, you need to create an operations manual for each of your processes. Work with your employees to develop this manual by getting everyone to detail exactly what they do. Potential buyers will be impressed with a company that’s ready to go as soon as the change of ownership happens, and your purchase price potential will be greater. As a bonus, if your employees are trained to do what you do, your business will carry on just fine, even if you have to be out for an extended period or if an employee leaves your company.

5. Get Everything in Order

If you have neglected cleaning and organizing your facility, it’s time to get it in order. Go over everything, from machinery to inventory to paperwork. Get rid of anything you do not need and clean up everything else. Paperwork should be organized, and the construction office should be neat and organized. It may not be possible to get everything perfectly orderly, but make your best attempt (or hire someone to).

6. Check the Legal Documents

If your California construction company isn’t following local and federal laws, most buyers will turn away immediately. Read up on the laws and go through every step of your process to ensure you are in compliance. Also, make sure that all relevant employees understand the law.

7. Accurate Records Keeping

Go through your records and make sure that everything is up to date and completely accurate. A buyer will certainly do their due diligence, and if it looks like you’re not completely truthful, they’ll head elsewhere.

Go through your records of profits and losses and make sure they line up with what’s stated on your tax return. If your records and tax returns do not match, do not try to fix this issue yourself. You will need a CPA to reconcile the two, and you will also need a reasonable explanation for why there was an incongruence in the first place.

8. Financials

A buyer does not want to have a construction company that has a multitude of unresolved financial transactions. Make sure everything is current when it comes to money because no buyer wants to take on a business with a lot of pre-existing obligations.

Simply put, if you have any accounts you have not paid, take care of them as quickly as possible. If clients owe you, work to get their accounts current. If you owe anything in taxes, make sure to pay. Also, check to see if your business has any liens in place. Your finances should be clear and ready to go when you hand over your business.

9. Accounting

Once you’ve gathered and organized all of your financial documents, it’s necessary to review everything with your accountant. Your CPA can look over everything, make sure you’re current and tax-compliant, and advise you on any errors.

An accountant can also help you create records that show the true potential of your business. In most cases, the tax records of your business are set up to prevent paying a lot back in taxes. However, once it is time to put your business up for sale, you will want records to show your business’s potential for profits. It is important to let a CPA restructure these records instead of doing it yourself.

Additionally, you need to consider the taxes you will pay after the sale. An accountant can help you go over the terms and help you figure out how much profit you will have left after paying taxes. It is especially important to see how much you will actually get if you are retiring, as you’ll want to ensure you have enough to maintain your current quality of life.

10. Hire a Construction Business Broker

The steps to valuing and selling your construction company are complicated. It can take you many hours to get everything in order. If you are still working full-time running your construction business in California, you simply may not have the time to do both.

If this situation applies to you, you may want to hire a business broker. A qualified construction business broker knows exactly what to get your California construction business ready for sale. They can guide you through each step of the process, help you avoid any errors, make your construction company more attractive to buyers, and ultimately help you get a better price.

Types of Construction Contractors Companies in California

The construction industry includes a variety of contractors and company types. All are needed to complete building projects. These tend to be individuals or organizations contracted for projects like building and finishing individual homes or small business facilities. They include:

  • General Contractors
  • Small renovation contractors
  • Remodelers
  • Windows and walls
  • HVAC and energy efficiency
  • Plumbing
  • Roofing
  • Electrical
  • Excavation
  • Finishing, like painting and drywall
  • Landscapers


Owners of construction companies in California often need certified business brokers to list their companies for sale. These types of construction industry professionals work with the financing and planning of projects. They include businesses like:

  • Owner-builder
  • Real-estate developer
  • Professional construction manager
  • Package builders
  • Sponsor builders


Contractors and construction companies work in a variety of types of construction. Before investing in an existing construction business for sale, buyers want to know what type of construction they do. Those types include:

  • Residential Building
  • Institutional and Commercial Building
  • Specialized Industrial Construction
  • Infrastructure and Heavy Construction

What is the Role of Construction Business Brokers in Selling My Construction Contracting Company?

Qualified construction business brokers in California are experts in maximizing your business value before selling. Their expertise helps both buyers and sellers, and they are the best professionals to sell construction businesses. They have several tasks to manage while working with construction businesses for sale in California.

Qualifying Potential Buyers Through Buyer Analysis

One of their most important tasks is to look for buyers looking for growth through acquisition. Potential buyers often include next of kin, employees, single investors, Private Equity Groups, and other types of corporate investors. M&A trends show that several types of acquisition-oriented businesses also look to buy businesses in the commercial construction industry. 

Fortunately, construction business brokers know how to privately share information about private construction companies for sale without divulging sensitive details about the company because of their experience. Sometimes, competitors end up wanting to buy construction businesses for sale, so the need for confidentiality matters. 

Certified business brokers in California who specialize in valuing and selling construction businesses can maintain confidentiality because some deals do not materialize. If you were to release sensitive details in documents and records, competitors would have that valuable information for free. It is wise to follow the advice of your knowledgeable business broker to protect your business’s intangibles. 

Your broker knows when to share financials with a buyer and when to ask a seller for their financials. They might ask the buyer to sign a Confidentiality Agreement or a Non-Disclosure Agreement before sharing any financial information with them. Before sharing the seller’s business finances, the business broker will vet the buyer by seeing their financial information. 

Get The Construction Business Ready For Sale

Along with vetting buyers, the qualified construction broker will also work with the business’s exit plan. They will create and execute the listing in a confidential manner when requested by the owner of the existing contracting business for sale. Once the business is listed, the broker will also work on marketing and originating a deal or managing numerous offers and deals. 

The broker is heavily involved in valuing the business to achieve the most accurate value. They look closely at financial records and the efficacy of the intangibles. Once they have the value, they work on a buyer list to find the investor who is willing to make a deal on a profitable business for sale. 

The best brokers are focused on creating business value before selling the construction business, so they also work hard to maintain the plan’s goal. If something needs to change, your certified business broker will contact you to discuss a strategy adjustment. 

Originating the Deal

Your broker will also work hard to market the deal. Their expertise in mergers and acquisitions gives them a reliable list of vetted buyers who might be interested. 

The broker will also create a sales package including a Confidential Business Review (CBR) to generate interest for buyers who might jump on the opportunity at first glance. Through targeting and social selling, they confidentially discuss the value of investing in contracting and construction businesses for sale in California. 

If any of those investors show interest in buying California businesses for sale, the construction business broker evaluates their offers. They offer the buyers a market-offer analysis with detailed information about construction industry trends. Your experienced broker works to get you the best deal while helping buyers understand the value of your construction company. 

Negotiating with Buyer Due Diligence

Sellers need to participate in due diligence to share necessary information about the business. Sellers need to show many documents to buyers so they fully understand what you are offering for sale. This due diligence shows that your construction business has been profitable and supports what the seller represents to the buyer. 

Before sharing the due diligence, many buyers sign a Letter Of Intent (LOI) as a non-binding agreement about the purchase price and the potential aspects of any deal. Once buyers sign the document, your broker will share a long list of documents that you need to provide. They include financial documents like:

  • Income statements
  • Records of accounts receivable and payable
  • Balance sheets and tax returns from the last three to five years
  • Profit and loss records from the last two to three years
  • Reconciled cash deposit and payment records
  • Bank loans and letters of credit

You will also need to provide business documents like the seller’s claims about the business, including reasons for selling and details about the construction business’s reputation. You will also share documents about soft assets like intellectual property and trademarks. Other necessary documents include:

  • Partnership agreements
  • Lease arrangements
  • Utility accounts
  • Minutes from management meetings
  • Private details
  • Information about automated financial systems
  • Audit work paper files
  • Details about credit and historical searches related to the business


Construction business brokers can give you advice about sensitive information in some documents. For example, your due diligence document package should not include private details about employees, vendors/suppliers, and customers. You should also only provide the necessary details about contracts with employees, other contractors, and clients after the sale of the business closes. 

Due-diligence document packages should include lists of assets like equipment, tools, fixtures, and vehicles. Your document package should also include the condition of the assets. If licenses are necessary, the list needs to include details about related business licenses. Your broker will also share the value of the business so buyers can check on the fairness of the asking price. 

A broker recognizes that buyers are hesitant to make offers when there are warning signs in the due-diligence packages. Buyers become uninterested when a due diligence document package does not include the reason for sellers wanting to divest and more. They also lose interest when they are not given financial statements, information about employees, and tax statements. 

Other warning signs for buyers include:

  • Not agreeing to a reasonable period to conduct due diligence
  • Not introducing potential buyers to landlords or other agents such as insurance companies
  • Businesses for sale that are engaged in legal proceedings
  • Sellers who want quick closings
  • Sellers and businesses with questionable credit histories

Negotiating the Definitive Purchase Agreement

Offering contracting and construction businesses for sale in California involves several steps. The broker works closely with you and your legal advisor, especially while negotiating and finalizing the Definitive Purchase Agreement. This Definitive Purchase Agreement helps both parties reach their goals for the transaction and allows no room for error as it completely represents the legal wishes of each party. 

A good M&A Definitive Agreement is the lynchpin of a good transaction. Both seller and buyer exchange a large amount of information from different sources.  This is often over many months of conversations.  These exchanges are then condensed, with their individual interests, as best as possible into the Purchase Agreement. 

Items a typical Definitive Purchase Agreement may include:

  1. Treatment of Shares, Options, and any other Securities; if appropriate to the transaction
  2. Representations and Warranties
  3. Covenants
  4. Solicitation (“No Shop” clause)
  5. Financing
  6. Termination Fee (or “Break-Up Fee”)
  7. Indemnification
  8. Material Adverse Change (MAC) and Material Adverse Effect (MAE) Clauses
  9. Closing Conditions


The Definitive Purchase Agreement can have potential pitfalls, so your construction business broker needs to keep the communication open with the Buyer and their Deal Team as well as the Seller and their Deal Team.

The M&A Definitive Purchase Agreement also needs to include details about tax obligations and consequences, especially if shareholders are involved.

Avoiding Pitfalls if you have a Buy-Sell Agreement

What if the seller is two or more individuals?

Many constructions and contracting businesses have multiple owners or shareholders. Getting an agreement from a majority of the shareholders about selling the business and being willing to accept an offer can be challenging. One of the shareholders may not have any interest in selling the business at all or may want something specific most buyers will not be willing to agree. If this is the case, hopefully, there is a Buy-Sell Agreement in place as this will outline what each shareholder needs to do.  A few years previously I had a transaction with 9 shareholders.  One shareholder with a minority interest initially refused to sell.  Eventually, they changed their mind but it was stressful while this played out.

If no Buy-Sell Agreement is in place and there is tension between the owners and shareholders, the pressure to decide the future direction of the business may be challenging.  This article provides additional information for an owner or shareholder on
 how to avoid buy-sell agreement pitfalls. To help their clients, construction business brokers should understand the importance of assumption of liability, so their buyers and sellers know who is responsible for any lingering claims. 

The agreement also needs to have information about indemnity clauses regarding operations. For Construction Companies, concerns about environmental liability, breaches of warranties, and other issues need to be factored into the indemnity clauses of a Definitive Purchase Agreement.

Buy-sell agreements can be confusing, so it is helpful to learn how to understand buy-sell agreements and how a buy-sell agreement can save a business.

Buy-Sell Agreement Benefits

A buy-sell agreement benefits both the buyer and the seller, as well as other stakeholders like vendors, employees, and partners. These legal documents act much like an insurance policy for the people involved in a business transaction. Buy-sell agreements can protect the people who start a new business or buy an existing business in the building industry. 

A legally binding buy-sell agreement also offers protection when bringing a new partner to the table and protecting the business if one of the stakeholders dies before money changes hands. A well-crafted agreement services the company by being prepared for changes in laws, technology, and other stressors and strains on the industry. 

Your broker understands
 the legal intricacies of buying and selling a construction business in California. A unique aspect of California real estate law is that businesses must have escrow in place before the sale is completed. By specializing in local business mergers and acquisitions, Rogerson Business Services understands the intricacies of the state’s requirements. 

Negotiating the Terms

Your broker will negotiate the terms of the sale and include them in the buy-sell agreement. At this point, the buyer knows you have an emotional attachment to the business and have priced the deal with that in mind. They also know that the seller values the down payment and cash they will receive. 

As the deal moves closer to the close, the buyer knows that there are still opportunities to negotiate. At this point, the experienced broker is necessary because they do not have an emotional attachment to the business or its assets. They will keep the negotiation moving to get the terms set and the deal closed. 

Finalizing the Contract

The certified business broker will finalize the contract by checking that all required documents are completed and shared. They also check that all required legal documents are completed, so new liens will not be placed on the business. Once the contract is set, the sale can close. 

Closing the Deal

At this point, the certified construction business broker has checked the documents, followed laws, and prepared the buyer and seller for the transaction and transition. The construction broker will facilitate the translation, so the transition is as smooth as possible. 

Once the deal is finalized and closed, the broker makes sure that proceeds are distributed properly to the seller. They also ensure that the buyer has access to vital information like employee records, customer contracts, and vendor details.

If you are a construction business owner located in California with a business that generates at least $2 million in gross revenue and is ready to sell within 6 to 12 months, click on the send free inquiry button.

Ready to start?

Get in touch today for a free consult; let’s talk about your desires to sell, and how we can best help make it an easy, profitable process for you.

Alternatively, call me today at (916) 570-2674 or click this link for me to contact you.

Certified Machinery and Equipment Appraiser

Andrew Rogerson; Sacramento, CA

is a business owner of 39+ years.  This includes successfully owning and operating 5 businesses.  Andrew is a Certified Mergers & Acquisition Professional (CM&AP), Mergers & Acquisition Master Intermediary (M&AMI), Lifetime Certified Business Broker (LCBB), author of 4 books, and he gives speaking presentations on request.

Andrew helps business owners with a business in California, value and sell their business in the Lower Middle Market or with a value from $1m to $50m.



    5150 Fair Oaks Blvd, #101-198
    Carmichael, CA, 95608-5788


    Phone: (916) 570-2674
    Fax: (916) 473-8655


    Buying or selling a business is a complex process – and you shouldn’t go through it alone. You need an experienced business broker to guide you through the process.

    We make buying and selling businesses simple and straightforward. We’re qualified to handle the most complicated aspects on behalf of our clients, ensuring you walk away satisfied.