What Is My Business Actually Worth?
in Construction & Trades

The short answer

Valuation rests on how consistently job gross margins survive the handover of backlog and field labour rather than on the scale of current earnings. The version of this question that applies to construction and trade contractors is not the generic one. Service work earns double the margin of projects and loses every staffing argument to liquidated-damages clauses — so an answer that ignores job gross margin will be confidently wrong. The analysis has to start from backlog cover and change-order capture rather than from revenue.

Owners apply a multiple to reported profit from mechanical contracting work. Buyers instead judge how much of that margin remains after they take over responsibility for change-order capture and for allocating crews between projects that carry liquidated damages and service work that does not.

The decisive factors are the share of revenue concentrated in a handful of projects, the portion of earnings that recurs through service attach rate, the degree to which margin protection depends on the owner personally managing field labour and change orders, and whether gross margin by job can be defended against liquidated damages in the next backlog cycle. Each of these shifts the multiple more than an extra point of profit on a single job.

The operating question therefore becomes which of these factors is holding the multiple down and whether it can be improved in the time before a transaction.

How to tell this is actually your problem

These three together are the signature. One on its own usually points somewhere else.

✓ Backlog cover is calculated and shows too few months of scheduled work at current gross margin by job levels.
✓ A large share of profitable change orders or service calls stops when the owner steps away from day-to-day field decisions.
✓ Gross margin by job swings widely across projects because service attach rate remains low and non-recurring work dominates.

The move that usually makes it worse. Raising reported profit by tightening field labour costs in the year before a sale while leaving backlog quality, change-order capture, and service attach rate unchanged, which adds less value than correcting one of those drivers.

Who this is for — and who it is not

It is for you if you run or finance a contractor and you are within a few years of a transaction and have never had the earnings normalised. It is the situation where the numbers are available but nobody has put them in an order that produces a decision.

It is not for you if Percision is the wrong tool if you already know the answer and only need execution capacity, or if the business is pre-revenue — then the constraint is evidence about the market, not analysis of your own figures. Percision is not a lawyer, tax advisor, auditor, licensed appraiser, clinical or regulatory filer, or an AI implementation shop. It does not do HR casework, creative-only brand work, or impersonate a named consulting firm. It is a strategy analysis engine — not a template library. Also wrong if you need facilitation, politics, or someone to sit with a lender or buyer. Those are human jobs.

Percision is not a lawyer, tax advisor, auditor, licensed appraiser, clinical or regulatory filer, or an AI implementation shop. It does not do HR casework, creative-only brand work, or impersonate a named consulting firm. It is a strategy analysis engine — not a template library.

What this looks like when the analysis is actually run

Below is an excerpt from a real run of this analysis on a contractor. It is a sample profile rather than a customer, and it is unedited engine output — this is the format you get, on your own numbers.

The subject is Halloway Mechanical, a sample company profile used for testing rather than a customer — $180M revenue, mechanical contracting.

This is one move out of a full analysis. Read a complete report — every page, no email required.

What the engine does with this question

This question routes to Growth Portfolio Framework, one of 29 engagements the platform runs. For construction and trade contractors it works through job gross margin, backlog cover, change-order capture and service attach rate, then produces the sequence rather than a list of options — which move first, what it funds, and the observation that would say the sequence is wrong.

You watch the analysis get built before paying anything. Read a complete report here if you would rather see the depth first.

Questions people ask about this

What multiple should I expect?

Ranges by sector are easy to find and are the least useful part of the answer. Where you land inside the range is decided by concentration, recurrence, owner dependence and margin defensibility.

How far in advance should I prepare?

Two to three years if the aim is to move the multiple, because that is how long recurring revenue and reduced owner dependence take to become visible in the numbers.

Does growth or profitability matter more?

It depends on the buyer. Financial buyers pay for durable cash flow; strategic buyers pay for what the business does to their own position. Knowing which you are preparing for changes what to fix.

Is this different in construction & trades than in other industries?

Materially, yes. Service work earns double the margin of projects and loses every staffing argument to liquidated-damages clauses — which changes both the diagnosis and the order of the fixes. The metrics that decide it here are job gross margin, backlog cover, change-order capture, and an answer built on industry-general benchmarks will usually point at the wrong one first.

What data do I need before this analysis is worth running for a contractor?

Less than most people expect. Your last twelve months of revenue and cost split the way you already split it, plus whatever you hold on job gross margin and backlog cover. The analysis is explicit about what it is assuming where your data stops, which is more useful than waiting for numbers you may never have.

When is Percision the wrong tool?

Percision is the wrong tool if you already know the answer and only need execution capacity, or if the business is pre-revenue — then the constraint is evidence about the market, not analysis of your own figures. Percision is not a lawyer, tax advisor, auditor, licensed appraiser, clinical or regulatory filer, or an AI implementation shop. It does not do HR casework, creative-only brand work, or impersonate a named consulting firm. It is a strategy analysis engine — not a template library. Also wrong if you need facilitation, politics, or someone to sit with a lender or buyer. Those are human jobs.

Does Percision replace a lawyer, tax advisor, auditor, or AI implementation team?

Percision is not a lawyer, tax advisor, auditor, licensed appraiser, clinical or regulatory filer, or an AI implementation shop. It does not do HR casework, creative-only brand work, or impersonate a named consulting firm. It is a strategy analysis engine — not a template library.