[This article is the second of a two-part series focusing on the construction industry. Part One, “The State of the Industry,” can be found here.]
Spotlight on Construction, Part Two: How to Position Your Construction Company for a Successful Sale
There’s a talent gap in construction managment. If you want to sell your construction company, you may want to do some hiring first.
You’re ready to sell your construction company – but is your company ready to be sold?
There’s a big talent gap in the construction industry right now. Mid-size construction companies are overwhelmingly owned by white males of the “baby boomer” generation, who are now between the ages of 48 and 66. And while there are plenty of Millenials (13 to 31) on their way into the workforce, there is a severe shortage of qualified Generation-X employees (32 to 47) available to take over management roles as the boomers retire.
The first of the baby boomers started to turn 65 last year. Now, a baby boomer turns 65 every 8 seconds, at a rate of 7,000 per day. Certainly, some owners and C-level managers will choose to work well past that age, for personal or financial reasons. However, according to the 2011 U.S. Construction Industry Talent Development Report, 76% of owners 50 or older plan to retire in the next 10 years.
Writing for North American Oil and Gas Pipelines, Sylvia Vorhauser-Smith says:
“The industry is currently comprised of a large number of workers over the age of 50, a lack of those in the 30-50 age range and a small but steady supply of younger workers. Although the number of entry-level employees continues to trickle in, there are not enough in this group to compensate for the lack of mid-level employees and to take over the openings left by the retiring workforce. What results is a serious structural misalignment between the current skills of the workforce and the skills required for the future.”
Acquirers want, and will pay a premium for, companies with younger management in place that have the knowledge and leadership necessary to act as the exiting management’s succession. A solid succession plan must identify the high-value employees who will take over leadership when the owners and C-level management sell or retire. In an industry with a shortage of up-and-coming management teams, having a solid transition team in place is a big selling point that adds to your marketability and gets you a premium price for the company.
The strategic acquirers I work with are all telling me the same thing: “We are really looking to buy two things – the company, but more importantly, the management.” If you’re getting ready to sell your company, take a look around at your workforce. If all your general managers, project managers, estimators, and superintendents are baby boomers, and you’re not grooming their successors, you’re going to have a problem. You can set up internal training and mentorship programs, and start recruiting new talent from outside. That way, when you take your company to market, you’ll stand out from the crowd and get a premium price.
This post was written by our construction industry tag-team of Dan Flick and Jeff Flick.