From Blueprint to Legacy: Strategies on How and When to Exit

Jewel Toned InteriorsBlog


Taking the previous president’s words, my “swan song” for my Construction Executive’s Association (CEA) Presidency in 2023 was to start a conversation around succession for our members. The concept of legacy is an important conversation for all companies to have but it is also key for trade associations.  I currently belong to a variety of organizations that struggle with generational gaps in membership. As such, I helped plan the December program focused on the conversation of exit strategies.   

“Construction companies are like no other businesses when it comes to selling.” were the opening words from our facilitator Mike Balter, the Regional Managing Partner of Marcum, LLC an accounting firm that specializes in construction accounting.


In hindsight, Ken Jackson admitted that he didn’t do enough due diligence on the buying team. His construction company was founded by two generations of brothers - his father and uncle as leaders, and he and his younger brother as employees. They saw a lot of shits in ownership over the years including buying out the senior family members and leading up to selling the business to a private equity firm. Now their business is back in the hands of the family under Ken’s son's leadership after they successfully bought the company back from the buyer.

Debi Davis, Owner and Principal of The Case Team spoke of the seven key areas that need to be addressed to make sure you get the maximum value for your business. 

The Case Team will provide your company with the Value Assessment at no charge and will help you identify areas that need improvement.   It is recommended that all key personnel complete the Assessment and send it directly to Debi (  The anonymity of staff provides more honest answers.  She will then record the results and personally go over it with you. Two specific concepts Davis mentioned are to make sure the business runs as efficiently as possible and make sure the structure is in place to allow for expansive growth. She said it can take 3-5 years to improve the financial standing of a company to poise it for acquisition.


Leah Turnbull, Managing Director and National ESOP Practice Lead for BMO Bank emphasized the importance of a company having ample cash flow when developing a relationship with lenders.  She also discussed that buyers look at the entire management team when acquiring a business but that having a strong Chief Financial Officer or Controller is key. She shared that debt was cheap 12-24 months ago but now interest expense is a meaningful cash outflow. Banks are lending less because the cost of interest has increased significantly. Banks are looking for a partnership with their customers.  

At that point, Jackson added, “No matter what, if banks request you to be in a specific place, it will protect your interest as well!” If you expand rapidly you can find yourself behind the curve on systems and behind the curve on personnel. He indicated that he found success in hiring veterans and in participating in peer groups with non-competing companies. “Locate someone who has been through it before and allow them to mentor you!” You will find that they also went through the worry, heartache, and doubt you might be experiencing.

On the subject of personnel, Davis added, “Look at holes within your organization. You may have productivity that is not maximized. It is critical to look at the bigger picture and craft expectations and deadlines with your staff.” She discussed the importance of breaking down larger goals into smaller actions to help employees understand what needs to be accomplished each week. The most important aspect of communicating with employees during a potential acquisition is to make sure they know there’s light at the end of a job. You must communicate continuity to your team so they know they have a job after a project is completed.


Although we’ve seen some Employee Stock Ownership Plan (ESOP) situations go south locally, Turnbull admitted that she has “drank the ESOP Kool-Aid at the end of the day.” Business owners may choose to sell to an ESOP for four key reasons:

  1. You can Exit at your own pace - A third party will often want control, which limits your flexibility.
  2. Allows owners to Stay the course - If you value legacy, then an ESOP allows the strategic plan to transition the business while keeping the culture intact.
  3. Save on Taxes - There can be a significant tax saving in going with an ESOP because you pay zero in federal income taxes and can defer capital gains tax if desired.
  4. It can be a tool for recruitment and retention of your People - The possibility of ownership is a hefty carrot to dangle for potential employees and offers a significant acknowledgment of the contribution of employees who have tenure.

Balter challenged Turnbull, asking her to share what percentage of ESOPs don’t work out.

“They rarely go wrong,” said Turnbull, “Instead, many studies show they can be more efficient and more profitable,” Balter added that with an ESOP, the value of a business can be determined easily. He shifted to ask Jackson, “How did you come up with your value?”

“We were a heavy construction company with a lot of CapEx, which means a low multiple! It depends on the market.” Jackson also added that “Risk tolerance is varied. Some family members are so adverse to risk but family equals trust and that is a plus to have.”


In summary, there can be many challenges around the sales of any company but selling a construction company is especially nuanced. Solid financials and a strong leadership team are two key areas of focus when setting your company up for success, whether a transition is on the horizon or you’re looking for business continuity.