Business Transactions & M&A
Buying or Selling a Construction Company in Boise
Quick Answer
A construction acquisition turns on three things a generic purchase agreement ignores: surety relationships that do not transfer automatically, warranty exposure on work already completed, and work-in-progress accounting that determines whether the backlog is an asset or a liability.
In construction the backlog is either the reason you are buying or the reason you should not.
Construction is the Treasure Valley’s most visible growth industry, and construction companies change hands here regularly. They are also among the harder businesses to value, because most of what a buyer is acquiring has not been built yet.
A construction company acquisition Boise deal has to answer what happens to the bonding, the licensing and the jobs already underway before it can sensibly answer what the company is worth.
We act for construction and development businesses across Idaho and California. This is general information, not legal advice on a specific transaction.
Backlog priced as revenue
Signed contracts are valued as if they were earnings, without testing whether they were bid at margins the buyer can hold.
Diligence the work in progress
Job-by-job review of costs to complete, retention held, change orders in dispute and the margin actually remaining.
A price that reflects the jobs
The buyer pays for backlog that will earn, and prices separately for the jobs that will not.
A contract bid at a loss is a liability wearing a revenue costume.
Bonding and licensing
Surety credit is extended on the strength of an operator’s record, balance sheet and relationships. It does not transfer with a sale as a matter of course, and a buyer who assumes it will can close on a company that can no longer bid the work it was bought for.
Licensing and registration sit with the entity or individual holding them. Whether they survive a change of ownership is a question for the issuing body, and the answer should be confirmed in writing before closing rather than assumed from the structure.
Surety relationships are personal. They do not come with the assets.
Work in progress and retention
The work-in-progress schedule is the single most informative document in a construction target. It shows cost to complete against contract value job by job, and it is where optimistic bidding becomes visible.
Retention held by owners, disputed change orders and unbilled work all sit alongside it. Each is a receivable in the seller’s mind and a question in the buyer’s.
Warranty and completed operations
Work finished before closing continues to generate claims afterwards. Whether those claims follow the entity or stay with the seller depends on the structure and on what the purchase agreement says about assumed liabilities.
Insurance is part of the answer. Completed-operations coverage, its limits and whether it survives the transaction belong in diligence rather than in a post-closing discovery.
Completed work keeps generating claims long after the seller has gone.
What this means in practice
Construction deals reward early diligence more than most. The work-in-progress review usually moves the price, and it is better to move it before the letter of intent than after.
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Frequently asked questions
What makes a construction acquisition different?
Does contractor licensing transfer when a business is sold?
What happens to bonding after a sale?
How is construction backlog valued?
How can Clark Meyers help?
Sources
- U.S. Small Business Administration — Business Guide. www.sba.gov
- Idaho Secretary of State — Business Services (SOSBiz). sosbiz.idaho.gov
- Internal Revenue Service — Small Business and Self-Employed. www.irs.gov
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