Buying and selling construction companies in Valencia: market and opportunities

Why does buying a construction company in Valencia make sense now?

Buying an established construction company is, in many cases, the only realistic way to enter the sector with real operating capacity. The reason is simple: a construction company's most valuable resources — qualified staff, licences, official contractor classifications and relationships with public authorities — take years to build from scratch and cannot be bought separately.

After the 2008-2014 crisis and the years of adjustment that followed, construction activity in the Valencian Community (Comunidad Valenciana) now rests on three main drivers:

• Next Generation EU funds: Spain is one of the main recipients of EU recovery funds, and the Recovery Plan devotes a specific component to housing refurbishment and urban regeneration.
• Energy-efficiency refurbishment: The obligation to improve the energy efficiency of the existing building stock generates sustained demand for renovation work.
• Shortage of new housing: New housing output remains far below pre-crisis levels, creating a shortfall that drives new development — especially in Valencia and its metropolitan area.

However, the sector faces a critical bottleneck: the shortage of skilled labour. According to the Confederación Nacional de la Construcción (National Construction Confederation, CNC), the sector needs more than 700,000 skilled workers in Spain to meet the demand for housing and infrastructure linked to EU funds. In the Valencian Community, with its ageing building stock and the demand for refurbishment, this pressure is also felt.

This talent shortage makes construction companies with established teams especially valuable assets.

How much is a construction company worth?

Construction companies are valued at multiples that are generally lower than other service sectors, because of the cyclical nature of the business and the lower predictability of revenue. This is an indicative estimate based on Alcara Partners' valuation model.

Reference multiples

Method	Range	Median
SDE (companies with turnover < €2M)	1.5× – 2.8×	2×
EBITDA (companies with turnover > €2M)	3× – 5.5×	4×

Why are the multiples lower than in other sectors?

• Cyclicality: Construction is one of the sectors most sensitive to the economic cycle.
• Project dependence: Revenue comes from projects and is not recurring (except in maintenance).
• Execution risk: Each project is unique and carries its own risks (cost overruns, delays, litigation).
• Capital intensity: Machinery, vehicles and working capital needs reduce free cash flow.

What pushes the multiple up?

• Contracted order book: Signed projects still to be carried out give visibility of revenue.
• Official contractor classifications: Classification as a works contractor (by groups, subgroups and categories, registered in the ROLECE, the official register of tenderers) is a mandatory requirement for public works contracts with an estimated value of €500,000 or more (art. 77.1.a of Ley 9/2017, de Contratos del Sector Público, the Public Sector Contracts Act), so it opens the door to larger public works.
• Established technical team: Experienced site supervisors, site managers and skilled tradespeople are one of the scarcest assets.
• Diversification: Companies that combine new build, refurbishment, civil engineering and maintenance are more resilient to the cycle.
• Own machinery: Reduces dependence on hire and improves operating margins.

Illustrative valuation example

A construction company in Valencia with these figures:

• Turnover: €2,500,000
• Normalised EBITDA: €200,000
• 22 employees (3 qualified technicians, site supervisors and skilled tradespeople)
• Official contractor classifications in building and civil engineering
• Contracted order book: €1,800,000 still to be carried out
• Own machinery valued at €150,000

Applying an EBITDA multiple of 4.0×: €200,000 × 4.0 = €800,000

The contracted order book and the official classifications could justify a multiple of 4.5× or higher, raising the valuation to €900,000 or more.

Opportunities for buyers: why now

The market for buying and selling construction companies in Valencia offers a combination of factors that favours buyers with a medium-term view.

A generation of owners at retirement age

Many Valencian construction companies were founded or grew during the construction boom of the '90s and 2000s. Many of their founders are now approaching retirement age and, in many cases, have no family successor. This generates a steady flow of companies coming onto the market.

EU funds as a demand accelerator

Next Generation funds have created a peak in demand that many small construction companies cannot absorb for lack of capacity. Buying a company that is already operating — with a team, classifications and suppliers — allows you to capture this demand immediately, without the years it would take to build the structure from scratch.

Reasonable valuations because of the scars of the crisis

Construction tends to be valued with a "cycle discount" — memories of 2008 weigh on the perception of risk. For an informed buyer, this means being able to acquire productive assets (equipment, classifications, order book) at attractive prices.

Early-stage sector consolidation

The construction sector in Spain is extremely fragmented: thousands of small construction companies compete in local markets. The trend towards consolidation — driven by the solvency requirements of public tenders and the scale needed for comprehensive refurbishment projects — benefits whoever buys now and builds a larger group.

The seller's perspective: when and how to sell your construction company

If you own a construction company and are considering selling, these are the key aspects to consider.

Timing matters

Construction is cyclical, and selling when the order book is full and margins are good maximises your price. The worst time to sell is when you "need" to sell — urgency destroys negotiating power.

Prepare the team transition

The biggest risk for a buyer is that the key team leaves after the sale. Show that the company does not depend exclusively on you: delegate the management of projects to your technicians, formalise relationships with key subcontractors and document your estimating and execution processes.

Deal with the "skeletons in the cupboard"

Construction often carries contingencies: litigation over construction defects, claims from subcontractors, outstanding guarantees. A sophisticated buyer will discover all of this in the due diligence. It is better to bring it to light from the start and handle it transparently.

Value your assets correctly

Machinery, vehicles and property, plant and equipment have a value separate from the value of the business. Make sure they are correctly valued on the balance sheet and consider whether it makes sense to include them in the transaction or sell them separately.

Due diligence specific to construction companies

Buying a construction company requires a more thorough due diligence than in other sectors. These are the critical points.

Analysis of work in progress

The state of the projects under way is fundamental. The buyer must understand:

• Actual progress vs. amount invoiced
• Expected vs. actual margins
• Risks of cost overruns or delays
• Progress certifications awaiting payment

Legal contingencies

Construction defects (ten-year liability), employment claims, disputes with subcontractors, litigation with clients. A lawyer specialising in construction law is essential.

Official contractor classifications

Check that the classifications are in force, that the requirements to keep them are met (solvency, resources, experience) and that the sale does not put them at risk.

Relationships with subcontractors

Much of a construction company's capacity to execute depends on its regular subcontractors. Are there formal agreements? Are the relationships stable? Will the subcontractor keep working with a new owner?

Machinery and equipment

Inspection of the actual condition of the machinery, verification of documentation (ITV roadworthiness tests, insurance, CE certificates) and an estimate of remaining useful life.

You can explore opportunities in the construction sector in Valencia on our businesses for sale page. If you prefer to search among all the companies available to buy, visit our buying a business section.

Illustrative example: acquisition of a construction company in the Valencia area

To illustrate a typical transaction, here is an illustrative example with fictitious data.

ConstrVal (fictitious name) is a building contractor founded in 1998 in L'Horta Nord (Valencia). Key figures:

• Average turnover over the last 3 years: €1,800,000
• SDE: €140,000
• 15 permanent employees + regular subcontractors
• Classification in building (group C)
• The founder (64 years old) is looking to sell in order to retire

The buyer: a 42-year-old building engineer who has worked for 15 years as a site manager at a property developer and wants to become a business owner.

How the process could unfold:

1. Valuation: estimated range €252,000 – €392,000 (SDE 1.8×-2.8×)
2. If the due diligence revealed a claim for construction defects on a 2019 project, a provision of, for example, €35,000 would be set aside
3. A 12-month transition period could be agreed, with the seller acting as a consultant
4. Price in this example: €308,000 (SDE × 2.2×) minus the €35,000 provision = €273,000 effective
5. Payment: 70% on completion + 30% deferred for 12 months

Possible result: the buyer could grow turnover by taking advantage of the energy-efficiency refurbishment funds, while keeping the whole team.

Frequently asked questions about buying and selling construction companies in Valencia

Can I buy a construction company without being a construction professional?

Yes, it is possible. Many buyers are managers or investors who hire technical management. However, the law requires the contractor to appoint a site manager who, by qualification or experience, has the capability appropriate to the characteristics and complexity of the works (art. 11.2.c of Ley 38/1999, de Ordenación de la Edificación, the Building Act), and in practice it is advisable to have qualified technicians (building surveyor or building engineer) on the payroll or as collaborators. It is advisable to confirm this with a tax or legal adviser.

What happens to the ten-year guarantees on previous projects?

Ley 38/1999, de Ordenación de la Edificación, makes the parties involved in building liable for ten years for structural damage, for three years for defects affecting habitability and, in the case of the contractor, for one year for finishing defects, counted from the acceptance of the works (art. 17.1). That liability remains with the company that carried out the works: if you buy its shares, you take it on with the company. It is advisable to confirm this with a tax or legal adviser. It is essential to review this in the due diligence and, if necessary, negotiate price retentions or specific insurance.

Are the official classifications kept after the sale?

If you buy the company's shares, the classifications are kept as long as the company maintains the conditions under which they were granted; to do so, it must prove its economic and financial solvency every year and its technical and professional solvency every three years (art. 82 of Ley 9/2017). If you buy assets and transfer them to another company, that company will have to obtain its own classification. It is advisable to confirm this with a tax or legal adviser.

How long does the transition after the purchase last?

For construction companies the transition period is usually longer than in other sectors, because projects under way can take months to complete and transferring relationships with clients, subcontractors and public authorities takes time.

Is it better to buy a construction company with or without debt?

It depends on the structure of the transaction. If you buy shares, you take on all the liabilities (including debts). If you buy assets, you can choose what you take on. A company with debt is not necessarily a bad thing — what matters is that the debt is manageable and correctly reflected in the valuation.

How do Next Generation funds affect the value of a construction company?

The funds increase demand for refurbishment work, which improves revenue prospects and therefore value. A construction company with experience in energy-efficiency refurbishment and relevant certifications (Passivhaus, BREEAM, etc.) has a competitive advantage that is reflected in a higher multiple.

What specific risks should I watch for when buying a construction company?

The main ones are: hidden litigation over construction defects, cost overruns on projects under way, excessive dependence on a single client or type of work, key staff leaving after the sale, and loss of classifications for failing to meet the requirements after the acquisition.

Can I finance the purchase of a construction company with a bank loan?

Yes, bank finance is common. Banks look at the contracted order book, the profit history and the company's assets. Bank finance usually covers only part of the price, and the buyer contributes the rest from their own funds. The seller can also finance part of it through a deferred payment.

Conclusion

The market for buying and selling construction companies in Valencia offers an interesting window of opportunity: owners at retirement age, demand driven by EU funds, reasonable valuations and a talent shortage that makes companies with established teams valuable.

Whether you are a buyer or a seller, the key is to have specialist advice that understands the particularities of the sector and the local market. Request a free valuation if you want to know what your construction company is worth, or explore the buying opportunities available in the Valencian Community.

References

1. El Debate (16 September 2024). "La falta de mano de obra en la construcción pone en un brete los compromisos de los fondos europeos" (The labour shortage in construction puts EU fund commitments in a tight spot). Estimate by the Confederación Nacional de la Construcción (CNC). eldebate.com
2. Government of Spain. Plan de Recuperación, Transformación y Resiliencia (Recovery, Transformation and Resilience Plan). Componente 2: Implementación de la Agenda Urbana española: Plan de rehabilitación y regeneración urbana (implementation of the Spanish Urban Agenda: refurbishment and urban regeneration plan; addendum, September 2023). planderecuperacion.gob.es
3. Ley 9/2017, de 8 de noviembre, de Contratos del Sector Público (Public Sector Contracts Act), articles 77 and 82. BOE. boe.es
4. Ministerio de Hacienda (Ministry of Finance). Registro Oficial de Licitadores y Empresas Clasificadas del Sector Público (Official Register of Tenderers and Classified Companies, ROLECE). hacienda.gob.es
5. Ley 38/1999, de 5 de noviembre, de Ordenación de la Edificación (Building Act), articles 11 and 17. BOE. boe.es