Construction and refurbishment businesses in Alicante: buying, selling and valuation

In construction, one year's profit says little unless you know where it comes from. The buyer will ask for the order book of contracted work yet to be carried out, the actual margins on completed projects compared with what was budgeted and how the company has performed in bad years. A builder with work contracted for several months and stable margins is valued far above one that lives from month-to-month work.

The type of customer determines the risk. Working for private customers on refurbishments requires constant business development; working for developers concentrates payment risk in a few names; public works depend on tenders and on the contractor classification. If the company holds that classification, the buyer will want to know how it is maintained after the sale, because it rests on the company's own resources and solvency.

Contingencies are the big concern in this sector: warranties and liabilities for projects already handed over, open claims, retentions still to be collected and guarantees issued. A prudent buyer will ask the seller to answer for problems arising from projects carried out before the sale, and that is negotiated in the contract. Having an honest list of recent projects and their status speeds up that conversation.

Experienced site managers and foremen, together with a reliable network of subcontractors, are often the real asset of a small building company. Owned machinery counts, but it is valued for its condition and usefulness, not for what it cost.