Valuing a Concrete Company
The concrete industry is directly related to the construction industry. Concrete is heavily used in construction projects. While commercial construction decreased during the pandemic in 2020, residential construction has increased. Low-interest rates on mortgages have enticed consumers to buy and build. Residential construction has increased by 3.4% throughout the year 2021. Whether you want to buy or sell a concrete business, it is beneficial to understand the fair market value of a concrete company. Learn what a valuation expert considers when valuing a concrete company.
Many things can impact the value of a concrete business. Peak Business Valuation, business appraiser, works with individuals across the country who are buying or selling concrete contractor companies. Our trained professionals create detailed reports determining the value of your business. Obtaining a business valuation is one of the steps in the process of buying, selling, or growing. As part of the consultation process, we discuss key-value factors a valuation expert uses when valuing a concrete company. One note to remember, these numbers are only a guide. For specific information related to the value of your concrete business, schedule a free consultation with Peak Business Valuation.
Market Multiples for Concrete Contractors
- SDE Multiple Average Range: 2.10x – 3.22x
- EBITDA Multiple Average Range: 3.11x – 3.81x
- REV Multiple Average Range: 0.43x – 1.10x
** Disclaimer: These multiples are for educational purposes only. Multiples are based on companies with revenues between $1-$5 million. As such, the information provided does not constitute valuation advice and should not be acted as such. These multiples do not represent the valuation opinion of Peak Business Valuation or any of its valuation professionals. Seek the guidance and advice of a qualified business valuation professional about any matter in this article.
A valuation expert will determine what market multiples are applicable to your concrete company. Take a look at Valuation Multiples for Concrete Contractors for more information. By learning about the worth of your concrete business, you can begin to maximize the value of your business. This helps whether you are buying, selling, or growing, or acquiring a concrete company. Below is a list of some of the key success factors relating to concrete contractors. If you would like an in-depth valuation, please reach out to us below.
Key Success Factors
These success factors can help distinguish your company from other concrete contractors. Peak Business Valuation, business appraiser, helps concrete contracting companies learn the value of their business. For additional ideas see Value Drivers for Concrete Contractors, How to Value a Concrete Company, and Valuation Multiples for Concrete Contractors.
Product and Service Mix
Concrete is used in many parts of the construction industry. It is an essential piece in public and local municipalities. Contractors have many projects they work on at once. This can be large contracts such as housing developments or smaller, independent projects. Before the pandemic, commercial projects were bringing in most of the revenue. But as the pandemic progressed, residential construction increased. As of right now, residential construction is providing more revenue. This is due to low-interest rates and high demand from consumers. A valuation expert will consider the split of revenue between residential and commercial projects.
Recurring Revenue
Steady, repeat revenue is most valuable. This type of revenue comes from repeat contracts with building companies, government projects, etc… Creating a clientele that reuses your services is essential to lowering owner dependency. Lower owner dependency raises the value and worth of a company. This type of revenue sustains profitability and maximizes profits. For more information see Creating Recurring Revenue Streams and Reducing Owner Dependence.
Using Technology Proactively
There are several stages to laying concrete and multiple projects happening at once. Contractors have a lot on their plate. Using technology to track the progress of each project helps avoid costly mistakes. Another use of technology to increase revenue is technological advances in machinery. Many construction/concrete companies are hesitant to incorporate technology into their work. Ultimately it is costing them more to avoid technological advances than it is to invest in the proper equipment.
Trained Team
Having trained professionals on your team is necessary. Pouring concrete requires attention to detail and not a lot of room for mistakes. Essential structures such as bridges, tunnels, highways, hospitals, etc. are created from concrete. Creating and using training programs can help avoid legal issues and structural problems.
Summary
Paying attention to key success drivers will increase profits and success. The Covid-19 pandemic has changed the concrete industry’s focus from commercial to residential. Getting a business valuation can help identify areas to increase the value of your concrete business. In addition, a business valuation determines the fair market value of a concrete business.
Peak Business Valuation, business appraiser, values businesses across the country, including many concrete contractor businesses. Let us know if we can answer any questions you may have about valuing a concrete company. You can reach out by scheduling your free consultation below.
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