HOW MUCH IS MY CONSTRUCTION COMPANY WORTH?
A commercial subcontractor business is typically worth 2x to 3.5x trailing-twelve-month EBITDA. A $5M sub netting 7% produces $350K of EBITDA, which puts it at a $700K to $1.2M valuation. Clean WIP, documented job costing, and three years of stable net margin push it into the 3x to 3.5x band. Disorganized books cap the multiple at 2x.
The spread is that wide because buyers don't pay for revenue, they pay for provable profit. Three things move the number: a clean WIP that proves margin job by job, documented job costing that proves the margin repeats, and a three-year record at the same net margin. Without those, the buyer reads your financials as risk and settles at 2x. The fleet isn't what gets bought either. A sub with $1.8M in titled assets and disorganized books frequently sells for less than a sub with $300K in titled assets and a clean WIP.
WHAT IT MEANS.
Construction company valuation is the dollar amount a third-party buyer would pay for the business as a going concern, based on its trailing-twelve-month earnings, the quality of its financial records, and the durability of its margins.
The math itself is straightforward. Trailing-twelve-month EBITDA times a multiple, where EBITDA is net profit before interest, taxes, depreciation, and amortization, and the multiple is what the market pays for that earnings stream in your trade at your size. Most deals for commercial subs at $1M to $12M fall between 2x and 3.5x. Getting above that band takes either a strategic buyer paying for capabilities, recurring service revenue, or a multi-year contracted backlog that de-risks the next 18 months for the buyer.
WHAT KILLS THE SALE.
Owner add-backs the buyer won't accept
Most subcontractors run personal expenses through the business: a truck, a phone, a family member on payroll who isn't in the field. At sale time these become add-backs you ask the buyer to credit you for. A clean buyer accepts none of them without documentation and an aggressive buyer accepts maybe half. The undocumented $80K of add-backs you assumed would lift EBITDA frequently doesn't survive due diligence.
Customer concentration above 30%
If one general contractor is more than 30% of revenue, the buyer treats your business as a captive vendor and discounts the multiple by 0.5x to 1.0x. He isn't buying a customer relationship the GC controls, he wants to inherit a portfolio. Diversifying ahead of a sale is a 12 to 24 month project, which means this one gets decided years before the deal closes.
A working owner who can't leave
If the business can't produce a month of operations without the owner, the buyer sees the owner as the asset and prices the business at a discount. Building a project management layer, an estimating layer, and an office that runs without you is what turns your operating role into a coachable one. That conversion is what unlocks the 3x to 3.5x band.
WHAT IT LOOKS LIKE IN DOLLARS.
Disorganized books get 2.0x. Average sub books get 2.5x. Clean WIP with documented margin gets 3.5x. Most commercial subs at $1M to $12M sell somewhere inside that band, and the distance between the two ends of it's a bookkeeping question rather than an operations question.
A $5M sub running 7% net produces $350,000 of EBITDA. At a 2x multiple that's a $700,000 valuation, and at 3.5x the same earnings are worth $1,225,000. Same business, same revenue, same crews, and the only difference is whether the buyer can verify the earnings.
On a $5M sub running 7% net, the difference between selling at 2x and selling at 3x is $350,000. That's roughly the difference between three years of monthly bookkeeping and three years of monthly bookkeeping plus a proper monthly WIP review with a CFO. The CFO line on your P&L is the cheapest valuation lift you'll ever buy.
HOW TO MOVE THE NUMBER.
A WIP schedule that ties to the general ledger, refreshes monthly, and shows percent complete, cost to date, billings to date, and earned revenue by job is the highest-impact valuation lever a subcontractor controls. Without it, the buyer can't tell whether the $5M of revenue and the 7% net came from twelve jobs at 7% each or from one job at 30% and eleven at break-even. The first business is durable and the second is a coin flip. Buyers price the coin flip at 2x.
Job cost codes that line up with the way your estimator builds bids prove the margins repeat. A bid that estimates 30,000 hours of labor at $52 fully burdened, checked back against actual hours and actual burdened cost, shows a buyer that the estimator and the field are calibrated. A business where the bid said 30,000 hours and the field burned 41,000 with no documented reason might be profitable this year, but nobody can underwrite next year on it.
A sub that nets 9%, then 11%, then 10% is worth more than a sub that nets 4%, 15%, and 7% on the same average. Stability prices at a premium and volatility prices at a discount, because buyers underwrite the floor of the range instead of the average. A three-year range of 4% to 15% gets read as 4%, and a range of 9% to 11% gets read as 9%, which changes the EBITDA before the multiple is ever applied.
Run a WIP schedule monthly with the books closed by the 10th. Reconcile estimated job cost to actual at every job close, in writing and in your own words. Track net margin on a thirteen-month rolling view so the trend is visible at a glance, then document the owner's replaceable functions and assign them to specific people. None of that's fast, it's twelve to twenty-four months of consistent work, and the payoff is a multiple that doubles before a buyer ever walks in.
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.
Pricing
| 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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