You want to sell your construction company? Then it's good to know what the takeover market in the field of construction companies looks like. Increasingly, construction companies are taking over other construction companies in order to increase their capacity. These so-called "capacity acquisitions" are a major driver of the acquisition market for construction companies.
Last year, the number of mergers and acquisitions in the construction industry was higher than ever before. However, the industry does face several challenges, including labor shortages. In addition, prices for raw materials are skyrocketing. Whereas steel and wood in particular had previously seen huge price increases, it is now the turn of concrete, cement and bricks. Because of all these developments, the number of capacity takeovers as well as strategic acquisitions continues to increase.
There are many ways to value a business. A common method of expressing the value of a business is "a factor x gross annual profit." This factor is also called multiple and another designation for gross annual profit is EBITDA (Earnings Before Interest Taxes Depreciation and Amortization).
In construction and installation technology, the industry to which construction companies belong, an indicative EBITDA multiple range of 3.7 to 4.7 is currently in place, according to the Brookz Takeover Barometer. The average EBITDA multiple across all SME sectors is 4.90.
The valuation of a business is often the starting point for negotiations between buyer and seller. The outcome of these negotiations is the final sales price. So valuation and price are two different quantities. Besides valuation, the price is also determined by possible scarcity in the market, bargaining power of the parties, the strategic value of the business for the buyer and possible synergy effects for the buyer (cost savings, purchasing advantages).
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Do you want to buy a business or sell a business in the Construction & Installation Technology sector? With this Brookz Sector Monitor, we want to present buyers and sellers with facts, figures and a look ahead that provide insight into the number of transactions, the value development of businesses and the latest trends and developments in Construction & Installation Technology. Because in any buying or selling process, thorough preparation provides peace of mind, overview and structure.
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In figures, the number of construction companies in 2024 looked as follows(CBS):
With this online training from Brookz you are optimally prepared to largely sell your business yourself: 25 Powerpoint videos, a comprehensive valuation report, legal model contracts, handy templates, checklists and expert support. Plus 50% discount on listing your business on Brookz!
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A number of trends and developments will inevitably cause changes over the next few years, but also offer the construction industry many growth and acquisition opportunities:
The construction industry is facing a capacity problem. Because of the high unemployment rate among construction workers, from a few years back, many workers have left for other sectors. As a result, the construction industry suffers from a structural shortage of skilled workers, which is not (sufficiently) supplemented by the training institutions.
Raw materials have been very expensive due to scarcity for a long time, but the supply of heavy machinery has also seriously slowed down. There is not only scarcity in the raw materials market, but also a global shortage of computer chips.
Businesses can differentiate themselves by calculating and pricing the sustainable alternative for a requested solution based on the life cycle costing methodology. In this way, investment costs, maintenance costs and demolition or dismantling costs over the total life cycle of a building are made comparable. This requires different knowledge and expertise that construction companies must seriously invest in.
