CONSTRUCTION COMPANY VALUATION: WHAT IS IT WORTH?
A commercial construction subcontractor is usually worth 2.5x to 4.5x EBITDA. The multiple, not the revenue, drives the number. Clean job costed books, an owner who isn't the business, and no single customer over 25 percent push you to the high end. Messy books and owner dependence pull you to the low end.
If you want to know what your construction business is worth, the answer is a multiple of profit rather than a slice of revenue. Two subs with identical revenue can be worth millions apart. The one with three years of clean job costed financials, a team that runs jobs without the owner, and a spread of customers sells near the top of the range. Add backs are where deals get won and lost, so the owner truck, the family member on payroll who doesn't work, and the personal travel run through the company all have to be documented cleanly to add back to EBITDA.
WHAT IT MEANS.
Business valuation for a construction company is the price a buyer will pay, calculated as adjusted EBITDA multiplied by a market multiple that reflects risk.
Revenue doesn't set the price. A buyer pays for provable, repeatable profit they can keep after you leave. Clean job costed books that survive diligence push the multiple up, and an owner who is the business pulls it down, because at that point the buyer is purchasing a job instead of a company.
WHY TWO SUBS THE SAME SIZE SELL MILLIONS APART.
2.5x: messy books, owner dependent, concentrated
At the bottom of the range the books don't survive diligence, the owner is the business, and one GC carries too much of the revenue. A buyer looks at that and sees three separate risks they have to price into the offer. The multiple drops to compensate, and the drop applies to every dollar of EBITDA, not just the questionable ones.
3.5x: clean books, some owner reliance
The middle of the range is a business with job costed financials a buyer can verify, where the owner still carries relationships or estimating that nobody else can do. The books earn the multiple and the owner dependence caps it. Most subcontractors who have never worked on this sit here or below.
4.5x: clean, owner independent, diversified
The top of the range takes three years of clean job costed financials, a team that runs jobs without the owner, and no single GC over 25 percent of revenue. All three have to be true at once, and all three take time to build, which is why valuation work starts years before a sale. The upside is that every one of them makes the business better to own in the meantime.
WHAT IT LOOKS LIKE IN DOLLARS.
A $13.5M marine GC moved from a $2.3M valuation to $5.5M in nine months, with the same revenue and the same crews, by taking net profit from 7 to 14 percent on clean documented books. Nothing about the work changed. The profit and the documentation changed, and the multiple followed.
The CFOS target build is a $7.8M valuation at $12M of revenue. It holds zero debt and $650K always in the bank. For scale, CFMA's 2024 Construction Financial Benchmarker reports 6.3 percent net income before taxes across all respondents and 11.9 percent in the best-in-class top quartile, on 11.8 percent SG&A, and those are the industry's own figures rather than SPM targets. SPM holds a 10 percent net profit minimum before taxes as the floor, above what the industry averages and below what the best quartile earns, and a documented 10 percent is what a buyer pays a real multiple for. The figures for your trade and revenue band sit on /construction-subcontractor-financial-benchmarks-by-trade. Each of those is something you can work on this quarter.
THREE THINGS THAT RAISE THE MULTIPLE.
Books that survive buyer diligence are the first thing that moves the multiple, and job costing is what makes them survivable. A buyer wants to see which jobs made money and why, across three years, without taking your word for it. That takes a job cost structure running now rather than a cleanup project started the year you decide to sell.
A buyer pays more for a business that runs without you. If the estimating, the GC relationships, and the field oversight all route through the owner, the buyer is purchasing a job and prices it that way. Moving those functions onto a team is slow work, and it's the single biggest lever on the multiple.
Concentration is a risk a buyer discounts hard, because losing one relationship after closing changes the whole picture. Spreading revenue so no single GC carries more than 25 percent takes deliberate bidding over a couple of years. It also makes the business safer to own long before anybody makes an offer.
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.
FREQUENTLY ASKED.
