Does anyone have any experience with General Contractors?

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November 04, 2020

by a searcher from Lousiana State University in Houston, TX, USA

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Reply by a lender
from University of Missouri in St. Louis, MO, USA
We have a specialty lending group in construction lending. Main point I would tell you is that EBITDA is a great metric to benchmark but focus on the backlog and the WIP reports more. Detailed WIP reports are a must. Otherwise you could buy a business that appears to be in great shape but it only takes one bad project to sink a GC. Also pay close attention to the working capital. These are WC intensive businesses and most GC projects have retention. If your margin is 20% but you are having 10% held in retention then you will take a while for your WC to normalize
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Reply by a searcher
from University of Maryland in Pittsburgh, PA, USA
Derek: I currently work for/own for a low voltage systems integration company. I have extensive experience operating as a subcontractor for general contractors. We have "primed" some projects, but typically we work directly for general contractors and electrical contractors. I am very familiar with their accounting practices. Which kind of experience are you specifically referencing? Perhaps I can be of some assistance.
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