CONSTRUCTION COMPANY EBITDA AND VALUATION MULTIPLES.
Construction companies at $3M to $12M typically sell for 2 to 4x EBITDA. The multiple depends on two things: how clean and documented the profit is, and how long it has been running at that level. A construction company netting 7% on $3.3M with disorganized books might get a 2.5x multiple, a $577K valuation. The same company netting 14% with 9 months of clean documented profitability gets a 3x to 4x multiple, and a much higher valuation than that.
A buyer is paying for the profit they can verify. That's most of the distance between two contractors with the same revenue and the same crews. One of them can produce 24 months of monthly financials with job costing and a WIP schedule behind them. The other has a tax return and a story. The first gets a multiple, the second gets a risk discount and a long due diligence process. The work that earns the multiple is the same work that makes the business easier to run while you still own it.
WHAT IT MEANS.
EBITDA is Earnings Before Interest, Taxes, Depreciation, and Amortization, which is operating cash profit before the non-cash and financing items.
Most construction owners think about valuation when they're ready to sell. The ones who get the best outcomes think about it 2 to 3 years before they sell, and they use that time to document clean profitability, normalize owner compensation, and build the financial infrastructure that makes a buyer confident in the numbers. Valuation isn't what you earn. It's what a buyer can verify you earn.
WHAT COSTS YOU MULTIPLE.
The thinking starts when the sale starts
Most owners open the valuation question the year they want out, which is the point where almost nothing can still be changed. The owners who do best start 2 to 3 years ahead and spend that runway documenting clean profitability, normalizing owner compensation, and building the reporting a buyer will test. The multiple rewards recency, so the last 9 months of books carry more weight than the last 9 years of effort.
A buyer can't pay 4x for profit they can't verify
Disorganized books, no job costing, inconsistent monthly closes, no WIP, and owner draws mixed with business expenses make it impossible to confirm whether reported profitability is real and repeatable. The buyer answers that with a risk discount, because a discount is the cheapest tool they have. Clean, documented, verifiable financials produced monthly by a third party remove the discount entirely.
Net profit percentage is the lever
A company netting 7% and a company netting 14% on identical revenue aren't in the same conversation with a buyer. EBITDA roughly doubles, and the multiple usually moves up with it, so the two effects stack. 9 months of clean books at 14% net is worth more than 3 years of mediocre books at 8% net.
Debt and client concentration get discounted hard
Buyers discount heavily for MCA debt, maxed lines of credit, and personal guarantees against business assets, so a clean balance sheet commands a clean multiple. Concentration works the same way, which is why no single GC should represent more than 30% of revenue at the time of sale. Both are correctable with runway, which is the argument for starting two years before the sale rather than during it.
WHAT IT LOOKS LIKE IN DOLLARS.
Take a verified marine client at $13.5M netting 7% with disorganized books. EBITDA is approximately $945K, and at a 2.5x multiple that's a $2.36M valuation. Nothing about the crews, the work, or the customer list is the problem in that number.
The same business after CFOS built job costing, tightened spending, and produced 9 months of clean documented profitability at 14% net has EBITDA of approximately $1.89M. At a 3x multiple, that's a $5.67M valuation. Same revenue, same crews, same work, and $3.3M more in business value, recovered entirely from margin that was already inside the business but invisible.
The typical EBITDA multiple for commercial subs at $1M to $12M is 2 to 4x. The minimum documented profitability that supports a 3x or better multiple is 9 months. The CFOS target build is a $7.8M valuation at $12M of revenue, which is SPM's own benchmark rather than an industry figure, and it rests on a 10% net profit floor before taxes against the 6.3% net income before taxes CFMA's 2024 Construction Financial Benchmarker reports across all respondents. Net profit is what moves a valuation. The multiple is only the argument about it.
THE SIX THINGS BUYERS PAY MORE FOR.
Job costing, WIP, the CEO Report, and a balance sheet reconciled monthly. A buyer who can verify 24 months of consistent profitability pays more than a buyer who is guessing at it. Nothing else on this list substitutes for it.
Owner salary run at market rate rather than taken as draws out of profit. Buyers adjust for this either way, and clean books make the adjustment obvious and agreed instead of argued. An agreed adjustment is worth money at the table.
Concentration in one client is a risk discount, so no single GC should represent more than 30% of revenue at the time of sale. Broadening the base takes longer than anything else on this list, which is why it starts first. It also makes the business safer to own in the meantime.
If you leave for 30 days and the business functions, the buyer is buying a business. If it doesn't function, they're buying a job, and they price it like one. Monthly reporting that doesn't depend on the owner is part of what makes the absence survivable.
3 to 6 months of signed backlog at closing gives the buyer confidence in near-term revenue. Verbal commitments and long relationships don't transfer at full value, however solid they feel to you. Signed paper transfers.
MCA debt, maxed lines of credit, and personal guarantees against business assets all pull the multiple down. A clean balance sheet commands a clean multiple. This is usually the fastest of the six to move once the cash forecast is running and collections are working.
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, and no add-ons.
| Last 12 months revenue | Monthly fee |
|---|---|
| Up to $1M | $1,900 to $2,900 |
| $1M to $3.5M | $2,600 to $3,900 |
| $3.5M to $6.5M | $3,800 to $5,700 |
| $6.5M to $9.5M | $5,100 to $7,100 |
| $9.5M to $12.5M | $6,100 to $8,500 |
| $12.5M to $15.5M | $7,400 to $11,000 |
| $15.5M to $18.5M | $9,400 to $13,500 |
| $18.5M+ | Quoted individually |
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.
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 rather than a report.
Your bookkeeper keeps doing the books.
You stop touching the books.
Everything in Core, and we run the bookkeeping and the controllership as well. Nobody in your office is answering coding questions or chasing a reconciliation at month end.
We do the books. No payroll.
Every job shows its margin while it's still running.
Everything in Executive, plus the job costing and WIP platform set up, loaded with your cost codes, and managed for you every month. You never have to learn it.
We do the job costing.
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