Exits. Why do I feel that exit strategies matter a great deal now? Across the construction and contracting industry, the workers we all rely on, as well as many business owners, are nearing retirement age. That’s good news! Successful careers warrant a next chapter. However, the exit plans owners choose matter far beyond a balance sheet. They can shape whether skilled employees stay, whether apprenticeship pipelines remain healthy, whether local capacity survives, and whether our industry keeps showing up in the rooms where standards, best practices and future opportunities are made.
From my perspective, exit planning is stewardship. The goal is to help owners recognize the value they’ve built while keeping the enterprise, people, knowledge and community involvement vibrant. In this column, I try to walk through the main strategies I’ve seen, with the pros/cons and specific union and industry engagement considerations, from my point of view.
Family succession
What it is: Transition of ownership and leadership to a family member (or members), sometimes over years, with mentoring and staged control.
Why it works: The company culture maintains continuity; reputation, relationships, company and shop workflows tend to continue. For signatory companies, the incoming generation typically maintains the current labor agreements, pension contributions, and participation in other areas, such as association life. Customers and general contractors see little disruption.
Pros:
• Preserves local ownership, community roots, outreach and continuity.
• Reduced disruption for the workforce, customers and vendors.
• Institutional and market knowledge stays intact and often sustains workforce growth initiatives and industry engagement.
Cons:
• Often, the hardest part is finding a willing and capable heir.
• Without early planning and a clear strategy, the handoff can stumble.
• Family drama (trying to maintain fairness between siblings or multiple family branches, leadership readiness) can bring disruptions to the desired timeline or create struggles securing financing.
Suggestions for success: Start early. Give successors real stakes and responsibility, bring in trusted outside advisors, and ensure you have a documented standard operating procedure including estimating standards, field leadership expectations, safety and quality assurance/quality control protocols, vendor relationships, workforce obligations, and industry engagement commitments.
Employee ownership or management buyout
What it is: Selling to the people who are already steeped in the business either more broadly or group of leadership. They are typically financed through a combination of debt and seller notes, paid with future company earnings.
Why it works: This strategy positions ownership with the workforce. It rewards loyalty and supports retention while preserving culture, fostering market engagement and promoting industry participation. Most ESOP/MBO transitions keep existing workforce agreement relationships intact and maintain apprenticeship training, safety committees and greater industry involvement because employees are familiar with and enjoy those benefits.
Pros:
• A continuity of people and processes exist with minimal customer disruption.
• This route creates a good retention and recruitment story: “You can build a career and become an owner.”
• The culture of being involved in the broader industry continues if it is instilled in the workforce.
• This exit can be planned and phased, giving the seller a clear exit timeline.
Cons:
• Raising financing is complex as well as the transaction costs with ESOP compliance.
• Mindful leadership development is needed. Not every employee is built to run a company.
• The timeline for the seller to receive value is extended and it requires confidence in the company’s future to continue earning.
Suggestions for success: People, people, develop your people by investing early in leadership development and building career paths. Have tight financial reporting and controls modeling conservative cash flows. Ensure that union, pension and benefit obligations are detailed clearly in any documentation so there are no surprises later.
Sale to another contractor
What it is: Sometimes a peer but typically a larger regional or national contractor acquires the business to grow markets, capacity or capabilities.
Why it works: These are our people, they understand our world. They know what it takes to be successful and can appreciate field leadership, shop capabilities and labor relations as core assets. Understanding what it takes to be a successful contractor or fabricator, the buyer is more likely to keep crews intact and value the brand relationships that have been built. When it comes to any union considerations, if both companies are signatory, it can be straightforward to continue that relationship.
Pros:
• Chances are this is an experienced buyer leading to smoother diligence and handoff.
• Economies of scale may help the acquired business with potential for better pricing and access to tooling upgrades, back-office support and safety/quality assurance resources.
• Since the buyer often values the brand and relationships that were created, ongoing outreach and industry involvement tends to continue.
Cons:
• As with any merger or acquisition, integrating companies can create redundancy, possibly resulting in consolidation of roles or even facilities.
• One of the secret sauces we all talk about: culture. Even if both companies have a strong, positive culture, there may be friction as factors such as pace, systems and decision rights shift.
• These buyers are disciplined and informed so while valuation may be fair, it may not always bring top-dollar.
Suggestions for success: Be sure to vet alignment on labor, apprenticeship and industry engagement up front. Ensure that those expectations are clearly stated in the integration plan.
Sale to private equity (or other type of investment group/consolidator)
What it is: Selling to an investment group or corporate platform that aggregates trade contractors or sometimes even other, unconnected businesses. Often this yields the highest immediate sale price and may include rollover equity in the new ownership structure and a chance for another payout if the business changes hands again.
Why it works: It can be fast and create liquidity with access to capital for modernization or expansion. Many owners stay on in a leadership role for a set length of time.
Pros:
• Real, meaningful, quick monetization for the seller, which can speed up equipment, technology and growth investments.
• Consolidated and centralized support roles may be available to reduce administrative burdens.
Cons:
• Control transfers to stakeholders with shorter vision, different goals and little industry experience.
• There can be pressure to cut costs in areas our industry considers important, such as association or peer group engagement, event participation, community service and apprenticeship engagement.
Suggestions for success: Do your due diligence, including a values discussion with the buyer, not only financial. Ask for clarity on:
• If being a signatory is important to the business, will it remain a signatory? For how long and under what terms?
• Will the budget still be allocated and allow time for industry advocacy and engagement, technical committees and industry events?
• Will apprenticeship support and safety/training participation be maintained?
• Look to see what the buyer’s historical record is on these points. If this is the first case in construction, what is the track record for acquisitions in other industries?
In my research and thinking on this topic, I’ve found that these aspects are often highlighted as part of the decision-making framework: legacy, continuity, industry impact, value versus values and readiness.
A good exit rewards the owner for building a successful business and career. A great exit, however, does that and strengthens the craft, the subset of the industry the company is in and the entire industry. For me, keeping skilled people employed, apprentices learning, customers served and our collective voice active in the rooms that shape the future is of enormous importance.
While family succession, ESOPs/MBOs and sales to other contractors can often reliably check those boxes, private equity and consolidators can also be effective when there is a commitment to continuity and industry betterment.
I know this is a hot topic at our annual convention each year, which happens around the release of this column. As an advocate for this industry, my ask is simple: to treat exit planning as part of your legacy of leadership.
Just like a good construction project, get engaged and start early, be clear about your must-haves and choose a path that pays you well for all your hard work and dedication without taking away from the people and institutions that helped build the business. Hopefully, in that way, when you hand off the keys, you are not only closing a chapter, but you are also leaving the trade stronger than you found it.
Travis Voss is the director of innovative technology and fabrication at the Sheet Metal and Air Conditioning Contractors National Association. In this role, he aids member contractors in identifying the critical technological trends within the industry and assists them in remaining at the forefront of these developments. Before joining SMACNA, Voss worked for Helm Mechanical as its leader of innovative technology. He serves his local community as a volunteer firefighter.
