Specialty contractors, HVAC, electrical and mechanical contractors, renovation, coatings and installation businesses. Buyers look past last year’s revenue to the backlog, the margins job by job, the crews and the licences behind the work. Kingston Investments advises owners of privately held construction and trades businesses on valuation, buyer identification, negotiations and the sale process, across Ontario from the Greater Toronto Area.
A contracting business is valued on what it reliably earns, and buyers judge that from the backlog, the margins job by job and the share of work that repeats. Crews, estimators, licences and bonding decide whether that earning power survives a change of owner.
Maintenance agreements and repeat service work are more predictable than winning the next bid, and buyers pay for that.
Over- and under-billing on open jobs can make a year look better or worse than it was. Buyers will test it.
Estimators, supervisors and licence holders who will stay matter as much as the equipment.
Your surety indemnity and open warranty obligations don’t disappear when the company is sold.
The single most useful thing to understand about how buyers see a contractor. The same revenue can be worth very different amounts depending on how it is earned.
Project and contract work
How buyers treat it They look at backlog, bid-hit rates, margins by job and customer concentration, and are cautious about extrapolating a strong year.
Recurring service work
How buyers treat it As more dependable earnings. A growing base of service agreements, especially in HVAC, electrical and mechanical work, can widen buyer interest and support the price.
A buyer will ask for a work-in-progress (WIP) schedule: every open job, with what’s been spent, what’s been billed and what’s left. It shows whether reported profit is real.
In Ontario, holdback retained under the Construction Act also sits in receivables until it’s released, which affects working capital at closing.
Buyers of trades and contracting businesses ask about the same things. Each one supports the price or gives the buyer a reason to lower it, add conditions or ask you to carry more of the risk.
Fixed-price, cost-plus and time-and-materials work carry different risks. Buyers look at who your customers are, owners, general contractors or property managers, and whether contract terms, change orders and payment practices are consistent.
Margins that hold job after job show that pricing and site management work. Buyers want to see estimated versus actual margins on completed jobs, not just the year-end total.
Who prices the work, and how accurately? A capable estimator other than the owner, with a known hit rate on bids, makes the business far easier to transfer.
Many contractors depend on a few general contractors or property owners. Buyers ask how long those relationships have lasted and whether they belong to the company or to you personally.
Licensed tradespeople, apprentices, foremen and supervisors are the capacity of the business. Buyers look at tenure, turnover, wages against the market, and any collective agreement, which in Ontario a buyer generally inherits.
Age, condition and replacement needs of trucks, lifts, tools and specialized equipment, and any leases or financing on them. Deferred replacement becomes a cost the buyer will deduct.
The licences the work depends on, WSIB standing, insurance history and bonding capacity. Some licences sit with individuals, some regulators require notice of ownership changes, and sureties underwrite the new owner afresh.
Open warranties, deficiency lists, callbacks and any disputes or liens. Buyers want to know what they might have to fix on work you’ve already been paid for.
Receivables, holdback, materials and the timing of progress billing make working capital in contracting lumpy. The target set in the purchase agreement needs to reflect a normal month, not an unusually good one.
The practical issues that most often slow a contracting sale. Plan them early with your lawyer, broker and surety.
Check which licences belong to individuals and which to the business. In Ontario, for example, an electrical contractor must hold an Electrical Safety Authority licence and keep at least one designated master electrician, and must notify the authority of certain changes, including ownership, within days.
Bonds on unfinished projects can remain in force after closing, and your personal indemnity to the surety continues. Options include replacing bonds, completing or re-contracting jobs, and asking for a release for future bonds.
Buyers and their lenders review liability and vehicle insurance, claims history, WSIB standing and safety records. A clean, documented history supports both the price and the financing.
If your workforce is unionized, an Ontario buyer is generally bound by the agreement under the Labour Relations Act. Buyers will price wage rates, benefits and any pension obligations.
General information only. Requirements depend on your trade, structure and contracts, so get legal and insurance advice for your situation.
You don’t need all of this done before talking to us, but each item gives a buyer one less reason to discount.
Two to three years out
Twelve to eighteen months out
Before going to market
Service-heavy trades businesses tend to attract the widest range of buyers. Project-heavy contractors more often sell to someone already in the industry.
Adding a trade, a territory, licensed staff or customer relationships. They understand the work, so diligence on jobs and estimates will be detailed.
Groups buying HVAC, electrical, mechanical and other service businesses in a region. They value recurring service revenue and managers who stay.
Occasionally a major customer or supplier buys a contractor to secure capacity. Fit and confidentiality need careful handling.
Experienced managers or tradespeople looking to own a business, usually with bank financing and often with seller financing or a transition role for the owner.
Wondering what your contracting business could be worth?
Answer a few questions about your business and its finances, and an advisor will review them and contact you to discuss a preliminary valuation. Confidential, with no obligation to sell.
We prepare the numbers a buyer will test, find buyers who value your trade and region, and plan the sale around your projects and season.
Sell-side advisory Our full process, step by stepWe normalize earnings, review the WIP schedule and backlog, and separate project from service revenue with margins for each.
We map who holds the licences, relationships and estimating knowledge, and raise bonding and indemnity questions early.
Buyers see an anonymous profile and sign a non-disclosure agreement first. Competitors receive customer names and pricing last.
We help you compare offers on cash at closing, working capital, holdbacks, warranty protections and your role after closing.
We coordinate the buyer’s review of jobs, contracts, equipment and licences with your accountant, lawyer and surety through to closing.
Sell-side mandates and completed transactions from Kingston’s portfolio. Businesses and parties are not named, and some values are confidential.
Commercial services
Deal value $2,100,000
Sold
A provider of interior and exterior painting and decorating services for industrial, commercial and institutional (ICI) clients.
View detailsConstruction & specialized trades
Published value $990,000
Sold
View detailsConstruction & specialized trades
Published value $975,000
Sold
View detailsConstruction & specialized trades
Deal value Undisclosed
Sold
View detailsConstruction & specialized trades
Deal value Undisclosed
Sold
View detailsConstruction & specialized trades
Deal value Undisclosed
Sold
View detailsKingston team introduced several qualified buyers and generated multiple competing offers for my company. The business sold at full asking price and on my terms within a few months, and the transaction closed on schedule as planned.
Short answers to the questions we hear most often. Every business is different, so we’re happy to talk through yours.
All FAQsBuyers start with normalized earnings, adjusted EBITDA for most established contractors, and then judge how repeatable they are: the backlog and its margins, the share of revenue from service agreements, customer concentration, the depth of supervisors and estimators, and the condition of equipment and vehicles. To find out what yours could be worth, request a business valuation: an advisor reviews your figures and contacts you to discuss them.
Because it tends to repeat. Maintenance agreements, service contracts and repeat work from the same customers are more predictable than winning new projects through bids. A contractor with a solid base of service revenue is less exposed to a slow year in new construction, which lowers the risk for a buyer and its lender.
A work-in-progress (WIP) schedule lists every open job with its contract value, costs to date, estimated cost to complete, percentage complete and amount billed. It shows whether jobs are over-billed (cash received ahead of the work) or under-billed (work done but not yet billed), and whether margins are holding. Buyers use it to test reported profit and to set the working capital at closing.
Bonds on unfinished projects can remain in force after a sale, and the indemnity you signed for your surety doesn’t end just because the company is sold. Common approaches include replacing bonds with the buyer’s surety, completing or re-contracting projects, and asking your surety to release you for future bonds. Plan this with your surety, broker and lawyer early.
Some licences belong to individuals, some to the business, and some regulators must be notified of ownership changes. In Ontario, for example, an electrical contractor needs a licence from the Electrical Safety Authority and at least one designated master electrician, and certain changes must be reported within days. Buyers will check every licence, registration and certificate the work depends on.
In Ontario, a buyer of a unionized business generally becomes bound by the existing collective agreement under the successor rights in the Labour Relations Act. Buyers will review the agreement, wage rates and benefit obligations carefully. Get labour law advice early if this applies to you.
It varies with the size of the business, how prepared it is and the buyer’s financing. Preparation, marketing, negotiation, due diligence and closing together often take many months, and some sales take a year or more. Timing the sale around the season and around large open projects can make the process smoother.
A business broker typically lists a business and responds to the buyers who come forward, which suits many smaller, simpler sales. An M&A advisor, sometimes called a business sale advisor, prepares the business for a buyer’s scrutiny, normalizes the financial statements, approaches suitable buyers confidentially, negotiates price and terms, and manages due diligence through to closing. For a contractor with backlog, bonding, licences and crews to transfer, an advisor’s preparation and negotiation of terms usually matter.
No. A year or two of preparation, such as building up service revenue, putting a capable project manager or estimator in place and tightening job costing, can change both the price and the terms you’re offered.
A practical timeline for owners who expect to sell in the next year or two, from getting an honest starting point to the months just before going to market.
Two offers at the same price can leave you in very different places. Here’s how to read the terms around the number before you choose.
Lending part of the price to your buyer can help a deal close. Here’s how a vendor take-back works and how to protect yourself if you agree to one.
Confidential conversation
A confidential first conversation about your backlog, your crews and what a buyer would see. There’s no obligation, and you don’t need to be ready to sell.
