Sell a Construction Company in Indianapolis, IN

Why Construction Sales Are Different

Most businesses sell on what they earned last year. A construction company sells on that and on the work it has signed but not yet built.

That makes the timing, the paperwork and the closing more involved than a typical sale. Buyers want to know the jobs ahead will make money, and that the people who win and run them will stay.

Owners around Indianapolis who plan for those questions tend to sell faster and keep more of the price.

Backlog and the WIP Schedule

Your backlog is signed work not yet completed. Your work in progress schedule, often called the WIP, shows where each open job stands right now.

A good WIP lists contract value, costs to date, estimated costs to finish, billings to date and expected profit for every job. Buyers and their lenders read it line by line.

Two terms come up often. Overbilling means you've billed ahead of the work done. Underbilling means you've done work you haven't billed yet. Both are normal, but large swings raise questions.

Keep the WIP updated monthly for at least a year before you sell. A history of accurate estimates is one of the strongest signals you can give.

Percentage of Completion, in Plain Terms

Many contractors report revenue using percentage of completion. Put simply, you count revenue as the job progresses, based on how much of the expected cost you've spent so far.

If a job is 40% done by cost, you count 40% of its contract value as earned. That gives a truer picture than waiting until the job is finished or the check arrives.

Buyers like this method because it shows real profit job by job. If your books use a simpler cash method, your CPA can help restate them before a buyer starts asking.

Equipment and Vehicles

Excavators, loaders, lifts, trailers and trucks often make up a large part of a construction company's value. Buyers will want a full list with age, hours and condition.

• List each piece with serial number, year and any loan or lease against it
• Keep maintenance records together and easy to share
• Separate owned equipment from rented or leased equipment
• Note anything that will need replacing soon so it doesn't surprise a buyer

An independent equipment appraisal can help both sides agree on value. It also helps a buyer's lender, since equipment often secures part of the loan.

Bonding Capacity

For contractors who bid public or larger private jobs, bonding capacity sets how much work you can take on. A buyer is paying, in part, for that ability to bid.

Bonding follows the owner's finances and track record. A new owner will usually need their own line with a surety, and the size depends on their balance sheet and experience.

Bring your surety agent in early. A buyer who knows they can keep bonding at a similar level will make a stronger offer and close with more confidence.

Crews and Key People

Buyers want to know who estimates, who runs the jobs and who leads the crews. If those answers all point to you, that is a risk they will price in.

Long-tenured superintendents and project managers are a real asset. Stay bonuses or a small share of the sale can help keep them through the change in ownership.

Subcontractor relationships count too. Reliable subs who show up on time are part of why your jobs finish on budget.

Jobs in Progress at Closing

A construction company almost never closes with every job finished. The purchase agreement has to say how open work is handled.

• Who finishes each open contract and takes the profit or loss on it
• How overbillings and underbillings are settled at closing
• Who collects retainage on jobs completed before the sale
• Who handles warranty calls on past projects
• Whether owners and general contractors need to approve contract assignments

These items often show up in the working capital adjustment, so they directly change what you take home. Settle them in the letter of intent, not at the closing table.

Who Buys Construction Companies in Central Indiana

Building activity across Hamilton, Hendricks and Johnson counties keeps buyers interested in local contractors.

• Larger contractors adding a trade, a crew or a new part of the metro
• Private equity groups building regional contracting platforms
• Experienced managers who want to own, often using an SBA 7(a) loan, which the SBA caps at $5 million
• Family members or key staff, often with a seller note

The price depends on steady earnings, the quality of your backlog and how much of the company runs without you. A business valuation gives you a starting point.

Before You Go to Market

Clean, reviewed financial statements make a big difference for contractors. Many buyers and lenders expect a CPA review or audit, especially if you bid bonded work.

Indiana's bulk sale notice may also apply when equipment and other assets change hands. Read about Indiana bulk sale tax clearance and build it into your schedule.

For larger contractors, mergers and acquisitions advisory runs a more structured process that reaches regional and national buyers.

Getting Started

Start by learning what your construction company is worth today. Use the free valuation form or call (317) 555-0186 for a confidential conversation.