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, sets 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 manages 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 paid through the company all have to be documented cleanly to add back to EBITDA.
Next step: Financial Health Snapshot. A CEO Report from your last 12 months: the numbers a buyer reads first.
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 accounts for 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 holds 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 fall 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 manages 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 an $8.5M 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. The CFOS target is 12 percent net profit before taxes, the book's figure, well above what the industry averages and level with what the best quartile earns, and a documented 12 percent is what a buyer pays a real multiple for. The figures for your trade and revenue band are 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 in place now rather than a cleanup project started the year you decide to sell.
A buyer pays more for a business that operates 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 accounts for 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. The one-time onboarding fee is right here in the table.
Built for subs doing $1M to $12M. Above $12.5M we quote.
| Last 12 months revenue | Core | Strategic | Platinum | One-time onboarding |
|---|---|---|---|---|
| Under $1M | $1,900 | $3,100 | $3,300 | $2,500 |
| $1M to $3.5M | $2,600 | $4,100 | $5,300 | $4,500 |
| $3.5M to $6.5M | $3,800 | $5,900 | $8,300 | $6,000 |
| $6.5M to $9.5M | $5,100 | $7,600 | $11,800 | $7,500 |
| $9.5M to $12.5M | $6,100 | $8,900 | $14,900 | $9,000 |
| Above $12.5M | Quoted | Quoted | Quoted | Quoted |
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, and it moves with your revenue band. Your first month is prorated, and your monthly engagement starts on the first of the first full month.
Just want the setup? Onboarding only is the same onboarding work with no monthly service after it, one time, at the onboarding fee plus $2,000. Start a monthly engagement later and $2,000 counts toward it. It starts at $4,500, and the price for every band is on the pricing page.
The three tier columns are the whole price. Which one fits 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.
- Online software only: QuickBooks, Sage, Viewpoint and similar. No VPN or hosted desktop.
- Not in any tier: payroll, pay applications, collections on receivables.
- Pricing valid through 2027.
CFO work. Your own bookkeeper keeps doing the books.
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.
Core, plus bookkeeping and bank reconciliations, plus job costing and WIP software set up and managed for you. Use your own online accounting software or we supply it, one price.
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.
Strategic, plus a controller who handles payables and receivables the way an in-house controller would. You approve every payment.
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.
FREQUENTLY ASKED.
