Many are looking to grow their construction companies. To do this you need additional people, equipment, and of course projects. Sometimes the simple solution seems to purchase another construction company and merge it into your company. But is this a good solution? Well, it depends.
I worked for a construction company which was privately owned and almost a family business when I joined them. Within twenty years the company had grown into a multinational public company with revenue of several billion dollars and profits of a hundred plus million dollars. This growth was achieved by a combination of growing the company from within, as well as purchasing other construction companies. However, not all these purchases were successful, and a few even proved very costly. But, some of these purchases provided the company with the right resources and clients to grow, as well as giving us a springboard into other markets and regions. In this growth, our company became a takeover target for another construction company, which fortunately we resisted and we eventually outstripped the size of that company and became far more successful.
So what did we learn from these takeovers, mergers, and acquisitions?
Why are you purchasing the company? Are you sure it’s a cost-effective solution?
It’s important to carefully analyze the reasons for purchasing another construction company. Only purchase a company if it’s going to offer additional opportunities and add to the balance sheet of your company. These opportunities may be because the new company:
Proper investigation is essential before purchasing a construction company
It’s imperative that a proper due diligence is carried out on the new company before purchasing it. This should include reviewing:
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The opinions expressed in the attached articles are those of the writer. It should be noted that projects are varied and different laws and restrictions apply which depend on the location of the contractor and the project. It's important that the reader uses the supplied information taking cognisance of their particular circumstances. The writer assumes no responsibility or liability for any loss of any kind arising from the reader using the information or advice contained herein.
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