Experience with construction companies?

January 04, 2024

by a searcher from Emory University - Goizueta Business School in Atlanta, GA, USA

I am in pre-LOI discussions with a construction contractor in the Southeast. The business is consistently profitable and I am bullish on housing for the foreseeable future (current rate situation notwithstanding). Does anyone have any experience with these companies? I would appreciate any/all input on things to look for, pitfalls to avoid, etc. Thanks!

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Reply by a searcher
from The University of Chicago in San Antonio, TX, USA

Thanks for the tag ^redacted‌ … I’m the daughter of a (former) LMM GC, a registered professional engineer with mega (>$5B) EPC experience, did a large Middle Market EPC-focused acquisition strategy a couple of years ago, previously advised a large private multifamily developers & constructor, and am currently supporting one of the largest private (industrial) GC’s in the country (with M&A and organic growth) — if insight or perspective based any of that sounds remotely helpful, always happy to chat … DM or email redacted or just grab some time that works @ https://calendly.com/abby-ellacap

Reply by a searcher
from University of Notre Dame in Charlotte, NC 28277, USA

I provided consulting services to a PE firm that acquired a lower-mid-market construction business. The key learning I had there was to be thorough in your due diligence and ensure robust warranties in the purchase agreement. Before this experience, I took for granted compliance with HR, insurance, and similar "professional" regulations. However I realized in an industry like construction with high labor turnover and self-built businesses, the rigor in these areas may not necessarily be what you expect. In my client's case - the office staff was the founders' friends & family (none of whom had prior experience or education in their assigned fields) and post-transaction the business had financial irregularities and was hit with numerous costly lawsuits from employees, clients, and suppliers leading to them shutting down.

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