Construction business valuations

Construction business valuations

Construction business valuations relate to firms engaged in the construction of buildings and structures or the provision of alteration, installation, and repair services. Construction business valuations also include firms providing site clearing and preparation services such as earthmoving, drilling and excavating. Also see engineering consultancy valuations and heavy equipment business valuations.

Construction business valuation considerations include understanding the specialised human resources and the equipment capacity.

Human resource considerations include the size of the work force, availability and turnover of staff, staff skill levels and time with the organisation, staff remuneration and training costs, employment agreements.  

Equipment considerations include the current utilitisation rate of the equipment, the target utilisation rate and industry benchmark, the age and state of the equipment and the ongoing capital maintenance expenditure as well as the reinvestment expenditure for growth.

Other key construction business valuation components include competitive advantage, intellectual property and brand, product mix, customer concentration, barriers to entry, supplier and supplier agreements, exposure to and outlook for the industries it operates in and working capital requirements.

Construction business valuation engagements have included:

• The valuation of business providing demolition services, excavation services and equipment hire. Equipment relates to excavators, loaders, tippers, and dumpers. Valuation required for a share transfer and ATO purposes.
• Valuation and pricing advice in relation to the potential acquisition of a firm providing electrical maintenance services. Cash flow and discount rate modelling.
• Forensic investigation into concerns about billings, variation documents and quotes from a home renovation and extension business. Review of all payments and reconciliation with invoices.
• Quantification of damages in relation to specialist asbestos removalist business. Expert Report prepared for the Supreme Court of Queensland. GBAR (Australia Pty Ltd v Brown QSC 14 2020.