"One More Boom": The Most Expensive Phrase in Construction
Devesh Sharma
Championing Business Owners to Capture Full Value | Unlock Wealth and Freedom with Proven Exit Strategies | 30+ Years of Expertise Driving Growth and Maximizing Sales | Don’t Just Exit — Win Big! ♟️ Chess Fan
Picture this, Devesh here. You're standing on the jobsite, steel-toed boots planted firmly in the dust, watching another project take shape. The backlog's looking decent, margins are finally where they should be, and your phone won't stop ringing with new opportunities. Life feels pretty good, right?
So when someone like me starts talking about selling your company, it's natural to wave us off with those four little words that have cost more construction entrepreneurs their retirement dreams than any market crash ever has: "Just one more boom."
I get it. After decades of pouring the foundation for your business, building it from the ground up, you want to cash out at the highest floor possible. You've survived the lean years, the 2008 nightmare, the pandemic chaos – why rush now when things are humming? But here's the straight truth, no chaser: that "one more boom" mentality is often the most expensive gamble you'll ever make, especially in today's market.
The 2025 Reality: This Ain't Your Father's Construction Market
Let's be honest about what's really happening in construction right now. While your backlog might look solid, the macro picture tells a different story. The U.S. construction sector is experiencing what I call a "mixed bag" market – some sectors humming, others hitting the brakes hard.
The Residential Reality Check: Construction spending has softened slightly, down about 0.4% recently, as residential building pulls back from elevated mortgage rates hovering around 7%. Single-family housing starts fell over 14% in early 2025 to the lowest pace in years. That's not just a statistic – that's your potential buyer pool shrinking. Multifamily construction, after booming in 2021-22, has also cooled due to high borrowing costs and a glut of luxury units in some markets.
The Infrastructure Bright Spot: Public-sector and infrastructure work remains strong. Federal dollars from the 2021 infrastructure law, along with the AI-driven data center boom, are keeping certain segments busy. If you're positioned in infrastructure or data centers, you're riding a different wave than residential contractors.
The Regional Divide: This isn't a rising tide lifting all boats. Texas, Florida, and parts of the Mountain West continue seeing robust activity. But New York City construction employment remains 11.3% below pre-pandemic levels – that's 18,200 fewer jobs than 2019. The recovery is uneven, and your local market matters more than national headlines.
The Cost Crisis Nobody's Talking About
Here's where it gets expensive. Trade policies are hammering material costs like a sledgehammer to your profit margins. The renewed 2025 tariffs mean imported steel and aluminum carry a 25% duty, and Canadian lumber faces nearly 40% in combined duties. I've seen warehouse projects where steel costs surged 8-10%, adding $2 million to budgets overnight. Quotes for fabricated structural steel are coming in 20% higher than just weeks prior.
These aren't temporary blips – they're the new operating environment. Material costs remain elevated about 40% above pre-pandemic levels, and contractors are having to renegotiate contracts mid-stream or build massive contingencies into bids. Some projects are getting paused entirely because they simply don't pencil out anymore.
The Seductive Trap: A $2 Million Lesson
Let me tell you about Mike, a client who ran a successful commercial concrete company in Denver. In 2019, he was doing $18 million annually with healthy margins. Three different buyers were circling, offering multiples that would have set him up for life. But Mike wanted to "ride one more boom." He figured infrastructure spending was just getting started, and he could push his valuation even higher.
Then 2020 hit. Projects got delayed, canceled, or put on indefinite hold. By 2021, his revenue had dropped to $12 million, margins were squeezed, and those buyers had moved on. When we finally got him sold in 2022, the valuation was 30% less than what he could have gotten three years earlier. Mike's "one more boom" cost him over $2 million in net proceeds.
You know construction is cyclical – you've lived through the feast and the famine. But here's what many owners don't fully grasp: buyers pay premiums for momentum, not just historical performance. When you're riding high with a full backlog and strong margins, you're not just selling current performance – you're selling the story of where you're headed.
Why Construction Timing Is Extra Risky in 2025
The current market presents unique timing challenges that make the "one more boom" strategy particularly dangerous:
The Labor Cliff: The industry needs an estimated 439,000 additional construction workers just to meet demand. About 20% of construction workers are 55 or older, creating a retirement wave just as immigration constraints thin the labor pool. In some cases, accelerated deportations and visa crackdowns have "wiped out 20% of a firm's crew overnight."
The Interest Rate Reality: High rates are compressing valuations. The cost of capital is up, so financial buyers can't pay as high a multiple and still get their return. Strategic buyers find acquisitions more expensive to finance with debt. The result? Multiples for small firms have softened by 0.5-1.0 turn of EBITDA compared to a couple years ago.
The Cash Flow Squeeze: A recent survey found that 70% of contractors regularly experience payment delays, and firms inflate their bids by an estimated 8% on average just to protect against slow payers. Over one-third report that projects have been canceled or stalled due to financing gaps caused by late payments.
The Math That Matters: Valuation Reality Check
Let's get real about money. You've probably heard the whispers: "I heard construction companies go for 4x EBITDA, is that true?" The reality is more nuanced, and current market conditions have shifted the numbers.
Private contracting businesses are typically valued at 3.0x to 6.0x EBITDA, depending on size, specialty, and performance. Engineering and design consulting firms often command higher multiples (5-7x) given their repeat fee income and lower capital intensity. But here's the kicker: a company that might have sold for 5.5x EBITDA in 2019 might only get 4.5x-5.0x today, unless it's exceptionally well-positioned.
What drives premium valuations in 2025:
What kills value:
The Hidden Costs of Waiting
Beyond the obvious financial risks, there are deeper costs that don't show up on your P&L but definitely impact your life and business value:
The Physical and Mental Toll: You've been carrying the weight of every project delay, every cost overrun, every safety concern for decades. Every day you stay in business is another day you're personally guaranteeing bonds and loans. "I have my house, even my personal assets tied up as collateral – I can't keep doing that," is something I hear regularly.
The Succession Reality: "Who will run this after me?" With 20% of construction workers nearing retirement and difficulty attracting young talent, the succession gap is both a pain point and a trigger to consider selling to a firm that has leadership to install.
The Relationship Erosion: Construction is a relationship business, but when market conditions deteriorate, relationships get tested. Clients start shopping for the lowest bid instead of best value. The owner who waits for "one more boom" often finds that the relationships that made the business valuable have eroded by the time they're ready to sell.
The M&A Market: Who's Buying and Why
The market for sub-$50M construction firms remains active despite macro headwinds. Strategic acquirers include regional competitors expanding market share, larger players pursuing tuck-in acquisitions, and specialty contractors adding new services or geographies.
Private equity-backed platforms are very active, targeting founder-led businesses where owners are retiring. Different buyers have different objectives: geographic expansion, market consolidation, niche specialties, infrastructure scale, client relationships, or talent acquisition ("acqui-hires" to secure skilled teams).
The key is understanding that these buyers are being selective, paying premiums only for firms that check key boxes around management depth, diversified revenue, and growth potential.
The Three-Scenario Outlook for 2025-2026
Base Case (Moderate Growth): The economy avoids hard recession, inflation moderates, and the Fed gradually cuts rates. Construction demand remains steady with infrastructure providing a floor. Valuations hold current levels or tick up slightly as lower interest costs improve buyer purchasing power.
Upside Case (Rate Cuts & Growth): Inflation falls faster, Fed cuts rates aggressively, economy reaccelerates. Construction demand strengthens, housing rebounds with lower mortgage rates. Valuations could increase 1+ turn from current levels as buyers compete with cheaper financing.
Downside Case (Mild Recession): Economy slips into mild recession, construction segments feel pain, backlogs shrink. Valuations compress another turn as buyers become risk-averse. However, opportunistic buyers with strong balance sheets may become more active, essentially bargain hunting.
Your Strategic Action Plan
Don't wait for "one more boom." Here's what smart owners are doing now:
Immediate Steps:
Market Positioning:
Timing Considerations:
Your Legacy: What Will You Build Next?
You've built more than a business. You've created jobs, completed projects that will stand for decades, built a reputation that means something in your community. That high-rise downtown? You built that. Hardest job of your life, but you nailed it.
But selling isn't the end – it's just framing out your next chapter. When you sell to the right buyer at the right time, you're not just maximizing financial return – you're ensuring what you've built will continue to thrive. But if you wait too long and market conditions deteriorate, you might be forced to sell to a buyer who doesn't share your values, or accept terms that don't reflect the true value of what you've built.
The construction business has been good to you. You've built wealth, created jobs, contributed to your community's growth. But every boom eventually ends, and trying to time the perfect exit is a fool's errand. The smart money says sell when you're strong, diversify your wealth, and enjoy the next chapter without the constant stress of running a cyclical business.
Sell when the market's good, your team's strong, and you're still steering the ship. That's how you get the best price, protect your legacy, and walk away with your head held high.
You built it from the ground up. Now let's make sure you get what it's worth – and secure the greatest project of all: your future.
Ready to Talk Strategy?
If you're thinking about your next move, let's connect. No suits, no BS, just real advice from someone who understands that timing the market perfectly is impossible, but timing it smart? That's what separates the pros from the dreamers.
You can't build a foundation for your retirement on the shifting sands of market timing. Sometimes the best construction decision is knowing when to hand over the keys.
Connect with me here on LinkedIn or send me a message. I'm not here to sell you anything – just to make sure you don't leave money (or your legacy) on the table.
I’ve seen business owners wait for one more good year again and again and still miss their chance to exit. The problem usually isn’t picking the wrong time. It’s not picking any time at all.
Creator of "FAST5 Framework" | Online Marketing Consultant | Help you to attract high-paying clients through brilliant Leads gen strategeis & Funnels | Online Marketer | Goolge & Meta Ads Expert Founder @Internet Go
3wDevesh, this is gold. Most owners chase peaks, but real exits happen on momentum, not max performance. Timing isn’t about waiting - it’s about knowing when your story is most attractive to buyers. Powerful perspective, especially with the demographic shift you mentioned.