Navigating BONDING in an acquisition

If you're evaluating construction businesses, pay close attention to whether the revenue is dependent on bonding. If it is, this should be an early diligence priority -- not something you discover late in the process. In many cases, the transferability of that revenue is directly tied to your ability to secure bonding pre-acquisition. Sureties will typically require meaningful industry experience and/or substantial personal financial strength to support underwriting approval. For most searchers entering the construction space, lack of direct experience can be a real constraint for bonding dependent companies. And while it may be tempting to rely on the seller to bridge that gap, having the remain on long-term isn't SBA eligible for longer than a year if you're buying 100% of the company and they're not typically open to personally guaranteeing your loan. The seller is usually not a practical or scalable solution. Plan accordingly -- this is a gating issue, not simply a box to check.