Does anyone have experience in damage repair / specialty construction?

searcher profile

April 06, 2020

by a searcher from University of California, Berkeley - Haas School of Business in Oakland, CA, USA

Hey folks,

Hope that you are staying safe given everything that's going on with COVID.

Does anyone have experience with damage repair or specialty construction companies? I'm in talks with a seller - we have built a great rapport, and from what I can tell, the books and processes within the business are very clean (i.e., no silly addbacks, gets all change orders signed by customers). Would love to pick the brain of someone who's gone down the path before, particularly on:

  1. How to size working capital. He's built a massive cash cushion, so I'm trying to figure out how much working capital the business needs
  2. Common gotchas in this industry to look for before and during diligence
  3. Wisdom on what it's like for someone with a white collar background to manage and operate a construction/contractor business

Gordon

0
6
97
Replies
6
commentor profile
Reply by a searcher
from University of Pennsylvania in Indianapolis, IN, USA
Be careful on progress billing and check the first quarter financials to see how they have been impacted by the pandemic.

I was looking at a business in the space and all their clients have put projects on hold, meaning their income is on hold.

Perhaps you can mitigate the risk through structure / larger owner carry, but the valuation and amount of cash at close should represent the current risk.
commentor profile
Reply by an member
from University of Illinois at Urbana in 10000 W O'Hare Ave, Chicago, IL 60666, USA
Hi Gordon, I used to work at a damage repair construction company, I can potentially provide some insight. Feel free to send me a note if you'd like to discuss further.
commentor profile
+4 more replies.
Join the discussion