THE BUY-SELL AGREEMENT FOR A CONSTRUCTION COMPANY WHO BUYS, AT WHAT PRICE, WITH WHAT MONEY.
Every construction company with more than one owner needs a buy-sell agreement that lists the trigger events, sets a price formula or appraisal process, and funds the purchase, usually with life and disability insurance. Without one, a partner's death can leave the surviving owner in business with a widow, an estate or a buyer the surety has never met. The 2024 Supreme Court decision in Connelly v. United States changed how company-owned life insurance is valued for estate tax, so agreements funded that way should be reviewed.
In Connelly, two brothers owned a building supply company, and the company bought $3.5 million of life insurance on each to fund a redemption. When one died, the Court held unanimously that the insurance proceeds increased the company's value for estate tax and that the obligation to redeem his shares did not offset them. With the federal estate exemption set at $15 million per person from 2026 under the 2025 tax law, many owners will owe no estate tax either way. Larger estates should have the structure reviewed, and every owner should confirm the price formula still makes sense.
WHAT IT MEANS.
A buy-sell agreement is a contract among a company's owners that sets who must or may buy an owner's shares, at what price and with what money, when that owner dies, becomes disabled, retires, leaves or divorces.
A buy-sell agreement is also a bonding document. The surety relies on the owners who signed the indemnity agreement, and it wants to know who will own and manage the company if one of them is gone.
WHERE BUY-SELL AGREEMENTS FAIL THE OWNERS.
The price was set years ago and never updated
Many agreements use a fixed dollar value or a certificate of value the owners were supposed to update each year. The company tripled in size and the number on the certificate did not. When a trigger event happens, one family gets far less than the shares are worth or the other partner owes far more than the insurance pays. In Connelly, the parties skipped the appraisal process their own agreement called for.
The purchase is not funded
An agreement that says the surviving owner will buy the shares is only as good as the money behind it. A construction company with its cash tied up in retainage and receivables cannot also pay out a departing owner's equity without hurting its bonding line. Life insurance covers death. Disability, retirement and a partner who simply wants out need a plan of their own.
The trigger events stop at death
Owners leave construction companies far more often by disability, divorce, burnout or a falling out than by death. Agreements that only cover death leave the hardest cases to a negotiation between people who are no longer getting along, often in the middle of open bonded jobs.
WHAT IT LOOKS LIKE IN DOLLARS.
Two brothers owned Crown C Supply. The company held $3.5 million of life insurance on each brother. The Court ruled on June 6, 2024, with no dissent, that the proceeds counted as company value for estate tax.
$15 million per person beginning in 2026, indexed for inflation, under the tax law signed July 4, 2025. State estate taxes may apply at lower amounts.
Life insurance for death, disability buyout insurance for disability, and an installment payout from company cash flow for retirement or departure.
THREE PARTS OF A BUY-SELL THAT WORKS WHEN IT IS NEEDED.
Death, disability, retirement, voluntary departure, termination for cause, divorce and bankruptcy each need a rule for who buys, who must sell and on what terms. Set different prices or payment terms for different events if that is fair, for example a discount for leaving in the middle of a bonded backlog.
Base the price on an appraisal at the time of the event, or on a formula from the year-end statements the surety already relies on, and set a schedule for updating it. Clean monthly books and a reliable WIP schedule make either approach cheaper and harder to dispute.
Decide whether the company or the owners will own the insurance. After Connelly, many advisors look at cross-purchase or insurance LLC structures in place of company-owned policies when estate tax is a concern. That choice belongs to your attorney and CPA, and the review is worth doing every few years.
FLAT MONTHLY FEE. NO SURPRISES.
Three tiers, priced by your trailing twelve month revenue. Which one you're in depends on how much of the work you want off your desk. No hourly billing. No payroll. The one-time onboarding fee is right here in the table.
| Last 12 months revenue | Monthly fee | One-time onboarding |
|---|---|---|
| Up to $1M | $1,900 to $3,300 | $1,000 |
| $1M to $3.5M | $2,600 to $5,300 | $1,500 |
| $3.5M to $6.5M | $3,800 to $8,300 | $3,000 |
| $6.5M to $9.5M | $5,100 to $11,800 | $4,500 |
| $9.5M to $12.5M | $6,100 to $14,900 | $6,000 |
| $12.5M to $15.5M | $7,400 to $17,650 | $7,500 |
| $15.5M to $18.5M | $9,400 to $22,400 | $9,000 |
| $18.5M+ | Quoted individually | Quoted individually |
The onboarding fee covers migrating your books back to the start of your last taxable year and getting you fully operational in 60 days. It's billed once, with your first invoice. It's the same for all three tiers. Your first month is prorated, and your monthly engagement starts on the first of the first full month.
Range reflects the three tiers below. Which one you're in depends on how much of the work you want off your desk. No payroll. No hidden line items. The onboarding fee is right here in the table.
You stop guessing.
You get the CFO work. Job costing built against the way you estimate, a 13 week cash forecast, monthly WIP, and a meeting every month that ends in decisions and never in a report.
Your bookkeeper still does the books.
Every job shows its margin while it is still open.
Everything in Core, plus the bookkeeping and bank reconciliations done for you, and the job costing and WIP software set up, loaded with your cost codes, and managed every month. Use your own online software, or move to ours and we cover it.
A bookkeeper we choose does the books and reconciliations. No payroll.
You approve, and the money side gets handled.
Everything in Strategic, plus a controller we choose who handles your bills and receivables for you the way an in-house controller would. They call vendors, pay the bills and keep the accounting current. We plan the cash flow first, and you approve every payment because it is your money.
A controller we choose does the payables and receivables. No payroll, no pay applications, no collections.
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