Selling a Residential Construction Business

Most residential construction companies sell based on a multiple of seller cash flow, adjusted for what the owner pays themselves and any one-time expenses. Value usually moves with job-margin consistency, whether your WIP matches reality, how dependent the business is on the owner, and how much warranty work is lurking. For a fast estimate, use Rejigg’s free valuation calculator, then sanity-check it against completed job margins and signed backlog.

No. Brokers often charge 5–10% of the sale price for running a process you can run yourself with the right tools and structure. Rejigg gives you access to pre-vetted buyers, digital NDAs, a secure data room, and offer tracking—and it’s free for sellers. Start with the preparation guide so your WIP, job costing, and backlog are ready when buyers ask.

Most residential construction sales take a few months, and the biggest variable is how quickly you can produce job-level proof. Clean WIP, a change order log, a signed-backlog report, and a warranty log usually speed diligence up. If those need to be rebuilt, buyers slow down or retrade terms. Rejigg keeps everything in one place with a data room and deal tracking. See the due diligence checklist.

Often, yes, as long as the business has provable cash flow, clean books, and operations that can transfer to a new owner. Lenders usually dig into job costing and WIP because residential billing can mask timing and margin issues. If you’re a seller, being lender-ready can widen your buyer pool and tighten your terms. You can model payments with Rejigg’s SBA loan calculator and share financials through the data room.

Buyers usually start with profit-and-loss statements and balance sheets, then quickly ask for contractor-specific support: completed job margin history, a current WIP schedule, and a backlog list that separates signed work from bids. Expect payroll reports and detail behind any owner add-backs, like personal vehicle costs or one-time legal fees. Rejigg’s QuickBooks integration and built-in data room help you share these cleanly without sending attachments to multiple buyers.

Owner add-backs are expenses that ran through the company but would not continue for a new owner, like personal vehicle expenses, one-time equipment purchases, or discretionary travel. Buyers accept add-backs when they are documented and normal for how a contractor operates. Keep receipts and a short explanation for each item so it does not feel like a last-minute negotiation move. Rejigg’s valuation tools and data room help you present add-backs with support.

Working capital is the cash buffer the business needs to run day-to-day, like paying subs and suppliers while you wait for customer draws to clear. In residential construction, it is closely tied to billing discipline and WIP accuracy since underbilling can force the company to finance jobs. Deals often set a target amount of working capital at close, which can change the final price. Rejigg’s negotiation guide explains how to think about it in plain English.

Most buyers expect the equipment needed to run jobs on day one to transfer with the business, especially if you self-perform carpentry, trim, or concrete. Diligence gets messy when key assets are personally owned, leased in the owner’s name, or near end-of-life. A clean approach is an inventory list with ownership, condition, and what transfers. Rejigg’s data room is a good place to store the inventory and titles so diligence stays organized.

Active projects are usually manageable if you plan the handoff and communicate early. Buyers want to know who owns client updates, who signs change orders during the overlap, and whether permits and inspections continue without a pause. Many sellers stay involved for a defined period to make introductions and keep homeowners comfortable while the buyer takes over day-to-day supervision. Use the transition planning guide to map the overlap in writing.

Most buyers ask for a non-compete because residential construction is relationship-driven, and they are paying for your reputation and referral engine. The negotiation usually comes down to geography, duration, and what types of projects are restricted. Reasonable terms are common, and overly broad restrictions create friction. This also connects to your transition since buyers may want you to be customer-facing for a period. Rejigg helps you compare offers side-by-side, including non-compete language and timelines.

Buyers typically review your contract template for allowances, selection deadlines, schedule-delay language, payment triggers, warranty terms, and change order rules. They also ask for real signed examples to confirm the company actually uses the language and the team follows it. If the template says one thing but jobs run differently, buyers assume disputes are harder to resolve. Rejigg’s secure data room lets you share templates and a few representative signed contracts after an NDA is signed digitally.

If the owner is the qualifier or the only person who can pull permits, buyers will want a specific continuity plan before closing. That could be a licensed employee stepping into the role, a defined transition period where the owner remains involved, or restructuring how permits are handled. This can stop work immediately if it is not solved, so buyers treat it as a closing condition. Use the due diligence checklist to document the plan.

Lien risk matters because buyers do not want a post-close surprise tied to jobs completed months earlier. Buyers look for a consistent process where subs and key suppliers sign lien waivers as they are paid, lined up with customer draws. Prior lien threats or filings are usually workable if you can explain what happened and show the process you put in place to prevent repeats. Rejigg’s data room is a clean place to store waiver templates and examples so diligence stays factual.

Yes. In residential construction, reputation is a real lead source, so buyers look at review volume, how recent reviews are, and patterns in complaints, especially around schedules and change-order disputes. Strong project photos and consistent documentation also help a buyer trust your quality. Reviews rarely replace financial proof, but they can support a higher price when operations and margins back them up. Rejigg helps you present marketing assets alongside job and warranty documentation in one process.

Seller financing is common in contractor deals because it can help a buyer bridge a financing gap and sometimes improves total price. The trade-off is risk, so you want clear payment terms, protections if the buyer defaults, and agreement on how warranty work and disputed jobs affect cash flow. Compare offers on total economics, not only headline price. Rejigg’s offer comparison dashboard shows seller financing terms side-by-side so you can evaluate risk clearly.

An earnout is when part of the purchase price is paid later if the business hits agreed targets. In residential construction, earnouts can get complicated when the measurement depends on job timing, WIP accounting, or whether change orders get approved and collected. If an earnout shows up, keep the definition simple and make sure the buyer cannot change the result by changing how jobs are run. Rejigg’s deal tracking keeps earnout terms, timelines, and definitions visible during negotiations.

Taxes depend on deal structure and what is being sold, such as assets, equipment, and goodwill. Residential construction can also surface payroll and sales tax issues during diligence, depending on your state and how you bill materials. Most owners reduce surprises by involving a tax professional early and cleaning up the books so personal expenses and one-time items are clearly separated. Rejigg helps you organize the documents a tax advisor and buyer will request in one secure data room. If you want help mapping the process, book a call on our consultation page.

A strong residential construction data room usually includes financial statements, completed job margin history, a current WIP schedule, a signed-backlog list, a change order log, a warranty log, license and permit details, subcontractor insurance certificates, and examples of contracts and lien waivers. Buyers want to tie real operations to the numbers. Rejigg includes a built-in secure data room so you control who sees what and when, without third-party file sharing. Start with prepare to sell your business.