Commercial Construction Valuation Insights

Hi All,

I’m evaluating a business in the commercial construction sector, with most of its revenue coming from national commercial contracts, providing consistent new business flow. The business has an EBITDA of ~$3M (with margins around 30%) and has seen flat revenue growth in recent years. The revenue mix is approximately 60% new builds and 40% upgrades/maintenance, with an annual CapEx of ~$500K.

One potential risk is that 25% of the total revenue comes from a single client. However, this relationship has been stable for over five years with no signs of reducing work volume. The business also owns property valued at ~$11M, and the owner is open to selling it as part of the transaction. Additionally, the owner is willing to consider a significant seller note and earnout (or forgiveable note) to account for the high customer concentration.

I’m looking for advice on two fronts:

Valuation Thoughts: Given the industry and financials, how would you approach valuing this business?

SBA Loan Considerations: Has anyone worked with SBA lenders on a transaction that included real estate? I’ve heard that if more than 50% of the deal is backed by property, lenders may offer longer amortization periods—possibly up to 30 years. Any experiences or referrals to SBA lenders familiar with this type of transaction would be greatly appreciated!

Thanks in advance for any insights!