Learn how to build, grow, and sell your contracting business effectively, ensuring long-term success and financial security for you and your team.
Running a contracting business is a journey filled with challenges, growth, and unexpected opportunities. For many contractors, the day-to-day grind of managing projects, handling customer complaints, and keeping the books balanced can make it hard to see the bigger picture—let alone imagine selling the business for a life-changing sum. Yet, as the construction industry evolves and investment dollars pour into home improvement, more contractors are finding themselves at the crossroads of succession planning and business sales.
This article dives deep into the real-world experience of building, growing, and ultimately selling a contracting business. Drawing from candid conversations, hard-won lessons, and a healthy dose of humor, we’ll explore the nuts and bolts of what it takes to create value, navigate the sales process, and set yourself—and your team—up for long-term success.
Like many in the trades, the journey began in a family business. The advice from the previous generation was clear: “Don’t do what I did—go to college.” But life had other plans. After a stint in community college, the arrival of a child prompted a return to construction, this time as an independent handyman and home improvement contractor. Armed with an $800 Chevy Astro van—affectionately dubbed the “free candy van”—the business started small, with a focus on crawl space repair and radon mitigation.
The early years were marked by long hours, lean paychecks, and a steep learning curve. But with persistence, the business grew to $300,000 in annual revenue. A merger with another contractor propelled the operation to $9 million over seven years, introducing the complexities of managing a larger team and the importance of leadership, financial literacy, and operational systems.
Success, however, was not linear. A lack of leadership experience led to the loss of the business to a partner—a painful but formative experience. This setback opened the door to new opportunities, including working under a seasoned operator in a larger company, learning the intricacies of sales, operations, and financial management. When that company sold to private equity, the realization set in: working for someone else, no matter the pay, didn’t offer the same fulfillment as building something of your own.
For many contractors, the business is simply a means to an end—a way to pay the bills and support a family. The idea of selling the business often seems far-fetched. Who would want to buy a job that requires early mornings, late nights, and constant problem-solving? This mindset overlooks a crucial fact: a well-run, profitable contracting business is a valuable asset.
Contractors are builders by nature, but often forget that they’re also building equity in their business. Just as a house or a piece of land has value, so does a business—especially one with a track record of profitability, a loyal customer base, and efficient systems. Even if the business is not a franchise, once it reaches a certain size (typically $1.5 to $2 million in revenue), it becomes attractive to buyers, including private equity firms and competitors.
Selling a business doesn’t have to mean walking away entirely. Options include bringing on minority financial partners, selling a majority stake, or executing a full sale. The key is to understand your goals—whether it’s injecting capital for growth, paying off debt, or creating generational wealth—and structuring the deal accordingly.
The process often begins informally, with buyers reaching out via email, phone, or even direct mail. These buyers are looking for businesses that have reached a certain scale and are often waiting for pain points to push owners toward a sale. The initial back-and-forth is much like a garage sale negotiation: the seller thinks the business is worth more, the buyer wants a deal, and both sides need to justify their positions with data.
Once there’s mutual interest, the buyer typically submits a Letter of Intent (LOI), outlining the proposed terms. Before sharing sensitive information, it’s wise to have a Non-Disclosure Agreement (NDA) in place. The due diligence phase follows, where the buyer’s accountants and attorneys scrutinize every aspect of the business—financials, operations, HR policies, and even unrelated entities that share an address.
Due diligence is exhaustive and, frankly, stressful—comparable to a “proctology visit,” as one contractor put it. But it’s essential for validating the business’s value and protecting both parties.
There are several ways to value a contracting business:
If your business has $100,000 in EBITDA and the market offers a 6x multiple, the business could be valued at $600,000. However, any outstanding debt must be paid off from the proceeds, so if you owe $300,000, your net is $300,000.
Negotiation is inevitable. Sellers should back up their valuation with data—comparable sales, market trends, and detailed financials. Buyers may propose earnouts (where part of the payment is contingent on future performance) or include clawback provisions (allowing them to recoup funds if the business underperforms post-sale).
Selling a business is a marathon, not a sprint. The process can take months, during which the business must continue to perform. Key leaders should be brought into the loop early (under NDA if necessary), especially if their cooperation is needed for due diligence.
Transparency is crucial, but timing matters. Major stakeholders and leadership should be informed as soon as practical, with clear communication about what the sale means for them. Addressing concerns about job security, changes in ownership, and future opportunities helps maintain morale and stability.
For owners, selling a business is more than a financial transaction—it’s an emotional milestone. The transition can bring relief, excitement, and, sometimes, a loss of purpose. It’s important to plan for life after the sale, whether that means staying involved in the business, pursuing new ventures, or focusing on family and philanthropy.
Don’t underestimate the worth of your website, phone number, and customer database. Even if the business is closing, these assets can be sold to competitors for significant sums.
Engage experienced attorneys, CPAs, and estate planners. The right structure can save tens or hundreds of thousands in taxes and fees.
The construction industry is experiencing a wave of investment and consolidation. Contractors who recognize the value of their businesses—and prepare accordingly—are well-positioned to capitalize on these trends. Whether your goal is to sell, bring on partners, or simply run a more efficient operation, the principles remain the same: build value, manage risk, and plan for the future.
For those who have spent decades building their business, the sale is not the end—it’s a new beginning. With careful planning, the proceeds can fund new ventures, support family and community, and create a legacy that lasts for generations.
Selling a contracting business is a complex, emotional, and ultimately rewarding process. By understanding the true value of your business, preparing for the sales process, and planning for life after the sale, you can turn years of hard work into lasting wealth and new opportunities.
If you’re considering selling your business—or just want to run a tighter ship—start by treating your business as the valuable asset it is. Document your processes, manage your finances, and build a team that can thrive with or without you. And when the time comes, approach the sale with the same care and craftsmanship you bring to every project.
Cheers to your success—on the job site, in the boardroom, and beyond.
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