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Is 2025 the Year to Sell Your Construction Business?
With sky-high multiples and strong buyer demand, 2025 could be your golden opportunity. Find out if your business is ready to capitalize
Keith Bloemendaal & Mike P
January 01, 2025
Running a small construction business is no joke—so let’s not waste time.
Here’s what’s coming your way this week:
🚧 Article this week: Is 2025 the Year to Sell Your Construction Business?
🚧 3 curated articles this week, San Fransisco housing plunging thanks to tech layoffs, 6 ideas to re-develop old malls into housing, and rising construction costs reported in Q3.
Get the knowledge you need, stay informed, and enjoy the ride.
Let’s get building!
Is 2025 the Year to Sell Your Construction Business?
As 2024 comes to a close, it’s time to look ahead and ask: will 2025 be the year you sell your construction business? If you’ve been considering it, I’ll cut to the chase—based on what I’ve seen, it’s shaping up to be a very good time.
Over the past several months, I’ve worked with and heard from financial groups aggressively acquiring service companies, especially in construction-adjacent industries like plumbing, HVAC, and electrical. The appetite for these businesses is significant, with some deals fetching multiples of over 10x EBITDA. Yes, you read that right—over 10x EBITDA. For business owners in the construction space, this trend signals a golden opportunity, but it begs the question: are you ready to take advantage?
Why 2025 Could Be the Time to Sell
The M&A landscape is hot, and here’s why it looks to stay that way into 2025:
1. High Demand for Established Businesses: Investors, including private equity firms and strategic buyers, are hungry for businesses with strong operations, loyal customer bases, and steady cash flows. Construction and service companies fit this bill perfectly.
2. Attractive Financing Conditions: With the Federal Reserve signaling a potential easing of interest rates, borrowing costs may drop, making it easier for buyers to finance acquisitions at higher valuations.
3. Strong Multiples in Service Trades: Industries like HVAC and plumbing are leading the charge with multiples that were unheard of just a few years ago. Even if your business isn’t in these niches, the ripple effect is elevating valuations across the board.
4. Industry Consolidation: Many buyers see a fragmented market as an opportunity to consolidate and scale. Your business could be the missing puzzle piece in their growth plan.
Are You Ready to Sell?
While the market is primed for sellers, getting your business ready for sale takes preparation. Here are the key questions to ask yourself:
• Are Your Books in Order? Buyers will scrutinize your financials. Clean, well-maintained records make your business more attractive and increase the likelihood of securing a top-dollar offer.
• Do You Have SOPs in Place? Systems and processes that ensure smooth operations without your constant involvement add immense value. Buyers want a business that runs itself, not one they’ll have to rebuild.
• What’s Your Exit Plan? Selling a business is as much about what comes next as it is about closing the deal. Do you have a plan for your role in the transition period? Are you prepared for life after the sale?
• Can You Articulate Your Value? Beyond the numbers, what makes your business unique? Loyal customers, a strong brand, and an experienced team can all contribute to higher valuations.
Steps to Get Started
If you’re serious about selling in 2025, start by:
1. Hiring a Professional: Whether it’s a business broker, accountant, or M&A advisor, get someone in your corner who knows the ins and outs of the selling process.
2. Assessing Your Financials: Review your P&L statements, balance sheet, and cash flow. Clean up any discrepancies and work with your accountant to present your numbers in the best possible light.
3. Building a Story: Buyers don’t just invest in businesses—they invest in potential. Be ready to highlight the strengths of your business and its growth opportunities.
4. Preparing for Due Diligence: Buyers will dive deep into every aspect of your business, from employee agreements to contracts with suppliers. Make sure everything is documented and organized.
Is 2025 Your Year?
The market conditions, buyer appetite, and attractive multiples make 2025 an ideal time to consider selling your construction business. But whether you capitalize on this moment depends on your readiness. If you’ve been thinking about selling, now’s the time to start preparing.
The opportunity is there—are you ready to seize it?
Happy New Year! Wishing you a very happy and successful 2025.
San Francisco House Prices Plunge Amid Widespread Tech Layoffs
Summary: San Francisco's housing market has experienced a significant downturn, with home prices returning to pre-pandemic levels. Condominium and co-op prices have decreased by 14.7% since May 2022, averaging $986,000—the lowest since 2015. Single-family homes have dropped 15.4% to $1.39 million. This decline is closely linked to extensive layoffs in the tech sector, which has seen a 20% workforce reduction in the "Information" sector over the past two years.
Why It Matters: The decline in San Francisco's housing prices reflects the city's economic challenges, particularly within the tech industry. As a major tech hub, San Francisco's real estate market is highly sensitive to employment trends in the sector.
Keith’s Take: San Francisco's housing market has always been a gauge for the tech industry's health. The recent price declines, driven by significant layoffs, suggest a cooling period that could offer a window of opportunity for buyers. The underlying economic factors contributing to this downturn may pose risks to long-term property value changes.
6 Standout Housing Policy Ideas from 2024
Summary: In 2024, several innovative housing policy ideas emerged to address the ongoing housing crisis:
Converting Abandoned Strip Malls into Housing
Replacing Housing Vouchers with Direct Cash Payments
Implementing Mixed-Income Public Housing
YIGBY Movement (Yes in God's Back Yard)
Factory-Built Homes on Community Land Trusts
Affordable Dorm-Style Living in Vacant Offices
These initiatives aim to increase housing supply, address blight, and reduce social isolation.
Why It Matters: The housing crisis requires innovative solutions beyond traditional methods. These policy ideas demonstrate creative approaches to repurposing existing structures and land, promoting affordability, and fostering inclusive communities. Implementing such strategies could alleviate housing shortages and provide more equitable living conditions.
Keith's Take: Innovation in housing policy is crucial to meet the evolving needs of our society. Repurposing underutilized spaces like strip malls and office buildings not only addresses housing shortages but also revitalizes communities. Embracing these creative solutions can lead to more sustainable and inclusive urban development, benefiting both residents and the broader economy.
Construction Costs Increase in the Third Quarter of 2024
Summary: Turner Construction Company's Building Cost Index reports a 0.77% increase in construction costs from Q2 to Q3 2024, and a 3.64% rise compared to Q3 2023. While material prices have remained stable, mechanical and electrical equipment costs have risen due to high demand and extended lead times.
Why It Matters: Rising construction costs can impact project budgets and timelines, influencing decisions for developers, contractors, and clients. Understanding these trends is crucial for effective financial planning and resource allocation in upcoming projects.
Keith's Take: The increase in construction costs, particularly for mechanical and electrical equipment, underscores the importance of proactive planning and supplier relationships. To mitigate potential delays and budget overruns, it's essential to engage in early procurement strategies and consider alternative solutions where feasible.
About Keith Bloemendaal
With over 36 years in construction, I’ve built businesses from scratch—some scaled to millions, others taught me the hard lessons. Now, I help contractors work smarter with practical strategies and tech solutions that save time, cut headaches, and boost profits.
When I’m not solving problems or testing new ideas, you’ll find me sharing stories and mentoring hardworking pros like you.
Connect with me:
𝕏 @ContractorKeith
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