Diligencing construction company with lots of equipment

May 24, 2023
by a searcher from University of California, Berkeley - Haas School of Business in Portland, OR, USA
Hello community,
I'm in early talks with a construction company that has a relatively high value and volume of equipment. Anyone have experience in this space that would be willing to share tips?
Thanks,
Paul
from Tulane University in Portland, ME, USA
1) As some said, look at spend on equipment recently
2) the other thing to pay close attention to for CAPEX intensive businesses is repairs and maintenance expense. By looking at this trend, you can get a good sense of if they are having an increasing number of issues with the equipment.
I3) I also look carefully at the in service dates of the fixed assets of the business to see where they are in their lifespan and if I can anticipate needing.
4) may be worth getting a fair value report from a specialist if this is key to the deal
5) build some cushion for CAPEX in your model, better to be conservative!
Please reach out if you'd like any other perspective or would like to discuss QoE / FDD services
from University of North Carolina at Chapel Hill in Winston-Salem, NC, USA