Private Equity Firms Buying Construction Services Companies

Construction services covers a wide range of specialty contractors and service providers, from foundation repair and waterproofing to fire protection, paving, restoration, elevator service and building inspection. Private equity has become much more active here, focusing on companies whose work recurs or is required by code rather than on general contractors that depend on winning new projects.

The businesses buyers like most combine a steady base of repair, maintenance and inspection work with some project revenue. Fire and life safety companies, for example, perform inspections that the law requires every year. Restoration contractors respond to water, fire and storm damage. Facility services companies maintain buildings under multi-year agreements. These revenue streams are more predictable than new construction and are valued accordingly.

Diligence focuses on the balance between service and project work, backlog and how it was priced, the share of fixed-price compared with time-and-material contracts, bonding capacity, safety record, licensing, and concentration among general contractors, property owners or insurers. Buyers will review how the company estimates and tracks job costs, since a few bad projects can erase a year of profit.

Many of the firms on this page own platforms that grow through local acquisitions. Owners should ask whether their brand and estimators will stay, how licenses held by individuals will be handled, whether bonding will carry over to the new owner, how project managers and field leaders will be kept, and whether any of the price is held back or tied to results after closing.

Owners should also think about the people buyers will meet. Estimators, project managers and superintendents carry much of the value in a contracting business, and a buyer will want to know who has agreed to stay and how they will be paid after closing.

Greymont is paid by buyers, never by owners. Greymont can help you identify which of these buyers are adding companies in your trade, and which would value your service and inspection revenue most.