How do I buy into a construction company as a partner?

Buying into a construction company is different from buying a shop. Work is in progress when you arrive, money is owed in both directions, and the clients usually know one person. Our page on buying in as a partner covers any business. This one covers what is particular to construction.

Open jobs and backlog at the buy-in date

Pick a date and decide how work in progress is treated. Who gets the profit on jobs already started, and who carries the cost overruns? How is signed backlog counted, if at all? Ask for a job list showing what is billed, what is owed, what customers are holding back and what remains. Your accountant can help you set the rules on paper.

Guarantees, surety and equipment loans

Ask whether the surety, the bank or an equipment lender will want something from an incoming partner, such as a personal indemnity or a guarantee on loans that already exist. Each will set its own terms. Ask what you would be signing before you commit. BDC’s purchase agreement guide, listed in the sources below, is one place to see common negotiating pitfalls.

Who keeps estimating and clients

If the current owner holds every client relationship, your buy-in rests on that person staying. Agree who estimates, who meets clients and who runs sites. Ask the owner to introduce you to the key clients and suppliers early.

A staged buy-in

Some partners buy in stages, tied to the owner’s gradual handover. That gives you time to learn the work and the owner time to step back. Write down each stage, what you pay, what you take on and what happens if someone wants out. BDC’s post-acquisition integration guide, listed in the sources below, may help you plan it.