Selling a Construction Business in Florida
A Guide for Florida Construction Business Owners by Patrick Archer, MBA, CBI, CM&AP | Florida M&A Advisor | Calder Associates of Florida | 305.763.4112 (Mobile) 407.499.2855 (Office)
Selling a Construction Business in Florida
Selling a Construction Business in Florida is an important decision for owners of these essential business in the Sunshine State. The construction industry is one of the most important contributors to Florida’s annual GDP which is fast approaching $1 trillion. Owners contemplating selling a Florida construction business must weigh the pros and cons of selling the business. Retirement is the primary motivating factor for most owners, while other owners may be planning to pursue new ventures in different industries.
Regardless of the motivations, sellers of construction businesses in Florida will want to package and price the business to stand apart from competing listings and attract potential buyers. Many of these buyers are looking 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.
Timing Considerations when 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.
Selling a Construction Business in Florida today can also help sellers command top dollar considering the supply and demand imbalance of available construction businesses in Florida post-Covid-19. While the pandemic wiped out thousands of small Florida businesses in sectors like restaurants, gyms and beauty salons, Florida residential, commercial and industrial construction businesses emerged stronger and more attractive in the eyes of their owners, their customers, and potential buyers.
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 Covid-19 pandemic in 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 Covid-19 pandemic 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, highly-specialized construction 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.
Current owners thinking of selling a construction business in Florida will want to know that potential buyers of the business have the operational knowledge, managerial skills and financial resources necessary to manage and grow the business for the next generation.
Most buyers of construction businesses in Florida will pursue SBA financing, and most SBA lenders will want to see that the buyer has some knowledge or relevant experience in the construction business.
“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. Most SBA lenders will view potential buyers through the same lens of relevant construction experience and qualifications.
Best Cities For Selling a Construction Business in Florida
For potential buyers open to living anywhere in the Sunshine State, sellers of construction businesses in Florida will be competing with other owners of similar business statewide. These buyers will be weighing several factors including a variety of demographic and quality of life metrics that will impact both their decision making process.
“Sellers of Florida construction businesses will be competing with owners of similar businesses statewide”
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. Some of Florida’s largest and most profitable construction companies are located in this 14-county coastal region.
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 Construction Businesses For Sale in Florida
Once you have decided on selling a construction business in Florida, it’s a good idea to work with an experienced and trusted Florida M&A advisor to get a better understanding of the current value of your business and a most probable selling price to qualified buyers looking to buy your Florida construction business with some combination of cash and financing, either through an SBA 7(a) loan, seller financing, a conventional bank loan, a leveraged buyout, assumption of debt, or some other mutual buyer/seller arrangement.
“The median asking price of Florida construction businesses for sale is $1,200,000”
The range of asking prices for Florida construction businesses for sale currently extends from $380,000 on the low end to $32,000,000 on the high end for Florida construction businesses generating over $500,000 in annual revenue and over $250,000 in annual cash flow.
Median Annual Revenue of Construction Businesses For Sale 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 Florida construction businesses for sale 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 For Sale 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 Florida construction businesses for sale 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 Information for Selling a Construction Business in Florida
Selling a Construction Business in Florida is a major life decision that requires serious due diligence and sound advice from an experienced and trusted M&A advisor.
If you would like to schedule an initial consultation regarding your Florida construction business and potential valuation, please call us at 305.763.4112, schedule a free consultation, or use the contact form below.