Diligencing construction company with lots of equipment

Member resources:

Frequent asked questions:

What is Searchfunder.com?

Searchfunder.com is an online community of searchers, investors, lenders, brokers and other professionals. Over 80% of those involved in searchfunds maintain a Searchfunder account to help them network, hire, and mentor others.

What are the benefits of membership?

In addition to accessing the most active online network of business buyers, Searchfunder licenses research that is simply not cost effective for individuals. Access over 15,000 industry reports and 50,000 transaction financials. You also get monthly credits for contact information for your company sourcing campaign with the option to purchase more at drastically discounted rates. Searchfunder has pre-purchased access from these data providers in order to empower individual buyers and to help searchers level the playing field versus private equity.

Do you have deals?

While we are primarily a buy-side network, we do have hundreds of brokers that regularly post deals to the community.

Can I find an internship on Searchfunder?

Absolutely! We have the industry's largest intern job board. If you are considering a search, the first step is to help another business buyer so you can hit the ground running.

What does it cost?

Searchfunder is a subscription service. We offer flexible monthly, annual and lifetime memberships.

Monthly

$79 / month

Annual

$19 / month

Lifetime

$432 / once

Those who maintain an account with us for over 4 continuous years are permanently added to the community without the need for a membership.

Do I need an MBA to join?

While a large number of our members come from dedicated programs at Harvard Business School, Stanford GSB, Chicago Booth, and other top programs, searching is no longer reserved for the elite. With the current abundance of dry powder in private equity, and an increasing number of business owners reaching retirement age, good deals rarely go unfunded.

Post a question, deal, job, etc...

Make a post...

Complete registration to post.

by a searcher from University of California, Berkeley - Haas School of Business
in Portland, OR, USA

3yrs ago

Diligencing construction company with lots of equipment

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

0 Likes

217 Views

reply by a searcher 3yrs ago
from University of North Carolina at Chapel Hill in Winston-Salem, NC, USA

Be really careful with equipment! Construction equipment depreciation usually should not be considered when determining EBITDA. 1. Normalize any accelerated depreciation taken back to the asset book value. 2. Compare the normalized book value to FLV (forced liquidation value) for each asset. 3. Any changes made to asset values on the balance sheet have to then be used to adjust EBITDA or SDE for your lookback. If you don't want to mess with it, or want to or need to dispose of some of it pre- or post-close, I may be able to help. Good luck!

reply by a professional 3yrs ago
from Tulane University in Portland, ME, USA

Many good answers above, as a due diligence provider I'll offer some tips from the financial perspective:

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