b'Successor management proves to be incompetent Children not capable of running business Ensuring a SmoothKey management leaves due to nepotism Transition of Ownership in a ConstructionKey management leaves due to poor planning Company Owner asking too high a priceMichael Clancy"As you can see, a lot of this comes down to people," Transfer of ownership of a construction company isn\'tClancy points out. "Very few potential pitfalls relate as simple as signing some paperwork and handingto the financial transaction. It is largely about over a set of keys. Owners must understand theirpeople." options, along with what they can do to maximize company value prior to selling. Most importantly,3 Ways to Sell a Construction Company owners must recognize why many construction business succession efforts failso they can proactively take steps to ensure a successful, lucrativeFirst things firstlet\'s quickly discuss the three exit of their own.primary methods for selling a construction company. As you will see, optimizing this transactional component largely comes down to people, too. There are two primary elements of business succession: ownership transfer and management succession. Ownership transfer is transactional; it isLiquidation Sale. While this is definitely a viable largely about making sure the financial and legaloption, it is not the best option. In fact, this is aspects are handled properly. The management piece,typically the "last resort" option when other means on the other hand, is where good planning becomesfor selling a business fall apart. There\'s a good crucial.reason why: Owners typically get roughly 60% of what the company is actually worth. Not ideal. "The management succession piece can be really tough," says Mike Clancy, principal at FMIExternal Sale. While this can prove to be the most Corporation. "There are a lot of things owners do inlucrative selling method for construction business the business that they don\'t even realize they areowners, it is quite rare. In fact, only 3% of doing. For example, they often decide who theconstruction business ownership transfers fall into construction company is and isn\'t going to do workthis category. For some reason, there aren\'t too many for. The problem is that these decisions typicallypeople interested in buying a construction business aren\'t based on pre-defined criteria; they are based onwho aren\'t already entrenched in the construction years of experience and intuition. How do you transferindustry. Let\'s be honest: Construction work is hard that kind of thinking to the next generation ofwork, and not everyone wants to work hard. management?" Internal Sale. This is by far the most common You can\'tat least not in the final days leading up tomethod for selling a construction business. When the moment when the owner walks out the door. Thisexecuted correctly, it can also be lucrative for is why continuity planning is so important. Ownersowners. There are several ways to go about internal should be developing the people behind them well insales, including simple direct sales and employee advance of putting the company up for sale. In fact,stock ownership plans (ESOPs). Benefits of this the typical ownership/management transition takes 8- approach include increased flexibility with 12 years, according to Clancy.transaction structure, and continuity for customers and vendors. Downsides for the owner are giving up some profit, having to disclose financial information There are a handful of common reasons whyto employees, and poor employee morale if the ownership transfers often fall apart during thosetransition doesn\'t go as planned. transitional years:(continued to page 8) 7'