A Guide to Buying a Florida Construction Business by Patrick Archer, MBA, CBI, CM&AP | Florida M&A Advisor | Calder Associates of Florida | 305.763.4112 (Mobile) 407.499.2855 (Office)
Buying a Construction Business in Florida
Buying a Construction Business in Florida
Buying a construction business in Florida can be a great way to take ownership of a successful business in Florida and tap into the positive demographics, population growth, median household income and other trends benefitting Florida small business owners today.
Selling a Construction Business in Florida
If you are the owner of a successful construction business in Florida, now could be a great time to take advantage of these trends and the rising demand among U.S. and international buyers for great businesses for sale in Florida that are established, profitable, “essential” in the eyes of local governments, and resistant to external pressures like recessions and online retailers.
The Construction Sector in Florida
The construction industry in Florida is one of the strongest markets in the United States. Florida residential construction companies added thousands of new jobs in 2019, as more Americans and international buyers chose Florida for their primary or vacation home. And Florida’s commercial construction industry grew at an annual rate of 10% in the five year period from 2015-2019.
Demand in this already booming industry only accelerated following the initial Covid-19 outbreak in early 2020, as more residents and companies fled the punitive tax regimes and failed anti-business policies of northern and Midwestern states like New Work, New Jersey, Connecticut and Illinois.
“New construction demand in Florida only accelerated after the initial Covid-19 outbreak in 2020”
Opportunities abound for buying a construction business in Florida. Experienced construction business owners can tap into Florida’s lucrative construction industry by acquiring an existing General Contractor business, a residential homebuilding business, a specialty contractor business serving residential or commercial clients, a supply company that sells and delivers building materials, or a business that specializes in infrastructure like highway paving, excavating, or underground utilities among other high-demand options.
Skills needed to Operate a Construction Business in Florida
As in all states, the construction business in Florida is highly competitive, and owners of the most successful construction businesses have many years of experience and hundreds of satisfied customers who depend on these companies for new construction of homes and commercial properties, repairs and remodeling of existing homes and commercial properties, and the construction and repair of major infrastructure projects impacting all Florida residents and visitors.
“Florida construction companies often specialize in residential, commercial or infrastructure projects.”
Ideally, a future owner of a construction business in Florida would already have several years experience as an employee or owner/operator of a construction business in their home state or home country.
Many owners of established construction businesses in Florida will only consider selling their business to a buyer who has a proven track record of experience in the construction industry or a related industry, either as an employee or an owner/operator of the business.
Best Cities For Buying a Construction Business in Florida
Once you’ve decided to purchase a construction business in Florida, it’s time to choose the location where you want to acquire a successful business. Several factors should be taken into consideration including a variety of demographic and quality of life metrics that will impact both your Florida construction business and the customers you serve.
Florida’s population of 23 million is spread throughout the state’s 67 counties, but the largest clusters of high net worth households paying top dollar for construction services are concentrated in the southern half of the state along a ring of 14 coastal counties on the Atlantic Ocean and the Gulf of Mexico. This “golden horseshoe” of Florida demographics encompasses the 25 Wealthiest Zip Codes in Florida based on Average Gross Income.
“This 14-county coastal region is the Golden Horseshoe of Florida demographics.”
This coastal region extends from Tampa/St.Petersburg on the Gulf side, south to Naples/FortMyers and down to the Florida Keys, east to Miami/Fort Lauderdale and extending north through the coastal communities of Boca Raton, Palm Beach, Jupiter, Port Saint Lucie and Vero Beach.
And, of course, no conversation about desirable areas to live and own a business in Florida would be complete without mentioning the Orlando metropolitan area. “The City Beautiful” is one of the fastest-growing metros in the country, and the influx of new residents creates ample opportunities for new and existing business owners.
“With over 2 million residents, Orlando is one of the fastest-growing metros in the country”
Long known as a tourism mecca and home to theme park giants like Disney and Universal, Orlando’s economy is increasingly diverse. And world class infrastructure improvements like the new $3 billion Terminal C at Orlando International Airport facilitates domestic and international arrivals and intrastate travel with Brightline, a high-speed rail link between Orlando and South Florida metros like Miami, Fort Lauderdale and West Palm Beach.
Median Asking Price of a Construction Business in Florida
Once you have decided to pursue the acquisition of an existing construction business in Florida and narrowed your list of desired cities and markets in the Sunshine State, it is important to get a better understanding of how much it will cost to purchase the existing Florida construction business either with cash or some combination of cash and financing, either through an SBA loan or seller financing if available.
According to the Florida database of businesses for sale, the median asking price for a construction business in Florida is $1,200,000 for existing businesses generating over $500,000 in annual revenue and over $250,000 in annual cash flow.
“The median asking price of a Florida construction business is $1,200,000”
The range of asking prices for Florida construction companies extends from $380,000 on the low end to $7,300,000 on the high end for Florida construction businesses generating over $500,000 in annual revenue and over $250,000 in annual cash flow.
Median Annual Revenue of Construction Businesses in Florida
With the right team of talented employees, solid supplier relations and an established customer base, construction businesses in Florida can be great revenue generators for both current and future owners. According to the statewide database of businesses for sale in Florida, the median annual revenue for a construction business in Florida is $1,671,000.
“The median annual revenue of a Florida construction business is $1,671,000”
The range of annual revenue for Florida construction companies extends from $738,000 on the low end to $20,000,000 on the high end for Florida construction businesses generating over $500,000 in annual revenue and over $250,000 in annual cash flow.
Median Cash Flow of Construction Businesses in Florida
Established and well managed construction companies in Florida can produce significant cash flow benefitting both the current owner and future owners of these businesses.
“The median annual cash flow of a Florida construction business is $402,000”
According to the official database of businesses for sale in Florida, the median cash flow for a construction company in Florida is $402,000. As such, construction businesses in Florida enjoy a median cash flow of 24% of annual revenues. ($402,000 / $1,671,000 = 24%)
The range of annual cash flow for construction companies for sale in Florida extends from $251,000 on the low end to $2,234,000 on the high end for Florida construction businesses generating over $500,000 in annual revenue and $250,000 in annual cash flow.
“The median payback period for a Florida construction business is 2.98 years.”
Based on these same numbers, the ratio of median cash flow to asking price for existing Florida construction businesses for sale is 33% ($402,000 / $1,200,000) which translates into a median payback period of 2.98 years.
Additional Research for Buying a Construction Business in Florida
If you are interested in performing additional due diligence on the construction industry in Florida, our resource page has an excellent collection of links to industry groups and associations for the most popular small business sectors in Florida including Florida construction businesses.
Additional Information for Selling a Construction Business in Florida
If you would like to schedule an initial consultation regarding your Florida construction business and potential valuation, please call us today 305.763.4112 (Mobile) and 407.499.2855 (Office) or use the contact form below.