Business valuation guide

How to value a construction business in Australia

Most small and mid-sized construction and trade businesses in Australia sell for 1 to 4.5 times their adjusted profit, usually including the plant, vehicles and tools needed to run them. Where yours sits depends on how much work is booked ahead, how widely revenue is spread across clients, and whether the business can keep its licence and win work without you.

The short version

Construction businesses are priced on adjusted profit multiplied by a range that reflects risk. Owner-run trades use profit with one working owner’s wage added back; managed builders and contractors use EBITDA.
The plant, vehicles and tools needed to earn that profit normally sit inside the price. Surplus equipment is sold separately, and asset value sets the floor.
Contracted work in hand, repeat clients and maintenance contracts lift the multiple. One dominant client or a loss-making fixed-price job cuts it.
Building licences stay with the qualified person, so a buyer needs their own licence or a nominee. Plan the handover early.
Debtors and retentions normally stay with the seller, and work in progress is adjusted at settlement. Agree how each is handled before you sign.

Typical multiples

What is a construction business worth?

Brokers value construction and trade businesses as a multiple of adjusted profit. For owner-run businesses that is usually PEBITDA (profit before interest, tax, depreciation and amortisation, with one working owner’s wage added back). For larger businesses with a management team it is EBITDA, with a market salary for every role. The ranges below show where different kinds of business usually land.

Indicative multiples for Australian construction and trade businesses, including operating plant and equipment
Type of business	Typical multiple	What puts it there
Small trade business	1.0x to 2.0x	Owner on the tools, adjusted profit under about $150,000, mostly one-off jobs won through the owner's network. Price often sits close to the value of the vehicles and equipment.
Established trade or specialist contractor	2.0x to 3.0x	Adjusted profit of about $150,000 to $500,000, supervisors or leading hands in place, repeat work from builders, strata or commercial clients.
Builder or contractor with management	3.0x to 4.5x	EBITDA above about $500,000, a contracted pipeline, no dominant client, estimating and project management not reliant on the owner.
Large, civil or plant-heavy groups	Case by case	Valued on earnings and on independently assessed plant, usually with a formal valuation.

Plant-heavy businesses are different. In earthmoving, civil and crane hire, the market value of the fleet can exceed the value of the earnings. When it does, the price tends to follow an independent plant valuation rather than the multiple. For transactions above $2 million, Benchmark Corporate advises on valuation and deal structure.

The method

How to value a construction business in four steps

Work out adjusted profit
Use two or three years of accounts prepared on an accrual basis, so revenue matches work actually done rather than invoices raised. Add back one working owner's wage, depreciation, interest and genuine one-offs. Take out profit from an unusually large job that will not repeat. The business terms glossary explains PEBITDA and add-backs.
Choose a multiple
Start from the table above, then adjust for work in hand, client spread, margin trend, staff stability, who holds the licence and the age of the equipment.
Check the assets
List plant, vehicles and tools at market value, not replacement cost. Separate the equipment the business needs from surplus items. Any finance owing is usually paid out by the seller at settlement.
Agree the settlement adjustments
Decide how work in progress, retentions, debtors, deposits received and warranty obligations will be handled. These sit outside the headline price but can move the final figure by a large amount.

Worked example

Electrical contractor, $1.9 million turnover

Eight staff, one working owner, a mix of builder work and commercial maintenance contracts. Figures are illustrative.

Worked example of a construction business valuation
Net profit per the accounts	$210,000
+ Owner's wage (one working owner)	$110,000
+ Depreciation	$48,000
+ Interest on vehicle finance	$14,000
− Profit from a one-off large project	−$40,000
Adjusted profit (PEBITDA)	$342,000
Multiple (established contractor)	2.2x to 2.8x
Indicative price range	$752,400 to $957,600
Includes	Vans, tools and test gear

Return check: at $855,000 (2.5x), a buyer who steps into the owner's role keeps $232,000 a year before tax, a 27% return on the price. Work in progress, retentions and debtors are settled separately.

Valuation methods

Which valuation method suits a construction business?

A multiple of adjusted profit is the starting point for almost every construction and trade business. The other methods act as checks, or suit larger and asset-heavy businesses.

Method	How it works	Use for a construction business
Multiple of adjusted profit	Adjusted profit × an industry multiple.	The main method for owner-run trade businesses and small builders.
EBITDA multiple	Earnings before interest, tax, depreciation and amortisation × a multiple, with a market salary for every role.	Builders and contractors with a management team in place.
Revenue multiple	Annual turnover × a multiple.	A rough cross-check only. Margins in construction vary too much for turnover to set a price.
Discounted cash flow	Forecast cash flows discounted back to today.	Larger contractors with long-term contracts or panel agreements that make forecasts reliable.
Asset value	Market value of plant, vehicles, tools and stock, less liabilities taken on.	Sets the floor. Often decides the price for earthmoving, civil and hire businesses.

For the general principles behind every method, see our guide on how to value a business.

Industry benchmarks

What profit do trade businesses make?

The ATO publishes benchmarks for each trade based on tax return data. Buyers and their accountants use them to test whether a business’s figures look normal. For the larger trade businesses below, average total expenses run at about 80% of turnover, which leaves roughly 20% for the owner before tax and before paying themselves.

ATO small business benchmarks, 2023–24 financial year, top turnover band for each trade (ratio to annual turnover)
Trade	Turnover band	Cost of sales	Labour	Motor vehicle	Total expenses
Electrical services	Over $500,000	30% to 41%	23% to 34%	3% to 4%	75% to 86% (avg 81%)
Plumbing services	Over $600,000	29% to 38%	23% to 33%	3% to 5%	75% to 86% (avg 80%)
Carpentry services	Over $400,000	Not published	27% to 43%	2% to 4%	76% to 87% (avg 81%)

What a buyer reads into these numbers. Total expenses above the range usually point to under-quoting, unbilled variations or jobs running over. Labour well below the range often means the owner is doing hours a buyer would have to pay for. Motor vehicle costs above the range can signal personal vehicles run through the business, which you can add back if you can show it.

Buyer checklist

What buyers pay more for

Two construction businesses with the same profit can sell for very different prices. These are the items buyers and their advisers check in due diligence, and where the multiple is won or lost.

Work and clients

Signed contracts and work in hand covering the next three to six months
A tender pipeline with a known win rate
No single client providing more than about a quarter of revenue
Repeat work from builders, strata managers, facility managers or government panels
Maintenance or service contracts that bring in recurring revenue

Licences and compliance

A licence holder or nominee who will stay through the handover
A working safety system, with safe work method statements and a clean incident record
Current public liability, contract works and workers compensation cover
No open defect claims, disputes or payment claims
Written subcontractor agreements and clear payment records

People and equipment

Supervisors and leading hands who plan to stay
Estimating and quoting done in a system, not in the owner's head
Staff and apprentices employed under the right award
An equipment register with ages, service records and any finance owing
Vehicles and plant in good order, with no major replacement due

What buyers check, in order: due diligence explained. On what goodwill is made of: the types of business goodwill.

Before you sell

How to lift your construction business's value

Value comes from two things: more reliable profit, and less risk for the buyer. Every extra $25,000 of provable profit adds $50,000 to $75,000 to the price at typical trade multiples, so the work below pays for itself.

Build reliable revenue

Win maintenance contracts. Recurring work is valued more highly than one-off projects.
Get on panels. Builder, strata and government panels give a buyer a steady flow of work.
Spread your clients. Reduce reliance on any one builder or developer.
Book work ahead. Go to market with a healthy order book, not after a quiet patch.

Protect margin

Cost every job. Job costing shows buyers which work makes money.
Bill variations. Document and invoice every change to scope.
Review your quoting rates. Check them against current labour and material costs.
Collect retentions and debtors. Old debts and unpaid retentions worry buyers and lenders.

Reduce the buyer's risk

Line up a licence plan. Train a supervisor who could become nominee, or agree to stay on as nominee for a set period.
Step back from estimating. Show the business can quote and win work without you.
Close out disputes and defects. Resolve them before going to market.
Tidy the asset list. Sell idle plant and keep personal vehicles out of the business.
Keep accrual accounts. Three years of accounts with a work-in-progress schedule. Our business health check covers the rest.

Common mistakes

Mistakes that cost construction sellers

Most construction sales that fall over do so in due diligence, when the buyer finds the profit, the order book or the licence position is weaker than the price assumed.

See what buyers are looking at in construction businesses for sale right now.

Pricing on turnover. High revenue at thin margins is worth less than a smaller, more profitable business.
Counting a one-off job as normal profit. Buyers strip it out, so the price falls during negotiation.
Forgetting the licence. If no one can hold the licence after settlement, the buyer cannot trade.
Valuing equipment at replacement cost. Buyers pay market value, and only for equipment the business needs.
Leaving disputes open. An unresolved defect or payment claim can stall or sink a sale.
Selling in a quiet patch. A thin order book at listing pulls the multiple down.

Know your number

Find out what your construction business is worth

Our construction and trade brokers value businesses against real sales data from 27+ years of business sales. Confidential and no obligation.

FAQs

Construction business valuation: common questions

What multiple do construction businesses sell for?

Most sell for 1 to 4.5 times adjusted profit, including the plant and equipment needed to run them. Established trade businesses and specialist contractors usually sell for around 2 to 3 times. Builders with a management team and contracted work can reach 3 to 4.5 times EBITDA.

Is plant and equipment included in the sale price?

Usually, yes. The vehicles, plant and tools needed to earn the profit are included in a price based on a profit multiple. Surplus equipment is sold separately, and any finance owing is normally paid out by the seller at settlement.

How is work in progress handled when you sell?

It is adjusted at settlement. The seller is paid for work completed up to settlement, the buyer earns the rest, and deposits already received are credited to the buyer. Retentions and debtors usually stay with the seller in an asset sale. The contract should set out exactly how each item is treated.

Can a builder's licence be transferred to the buyer?

Generally not. Building and trade licences are tied to qualified individuals, and a company licence relies on a nominee or qualified supervisor. A buyer needs their own licence or a qualified nominee, and sellers often agree to stay on as nominee for a handover period. In Queensland, see the QBCC licence requirements for companies.

How does relying on one client affect value?

It lowers it. If one builder or developer provides a large share of revenue, losing them after the sale would hit the buyer hard, so buyers reduce the multiple or ask for part of the price to depend on that client staying. Spreading work across more clients before you sell protects the price.

Should I sell the company's shares or its assets?

Most smaller trade businesses sell as an asset sale. A share sale keeps the company’s licence, contracts and supplier accounts in place, which can suit larger builders, but the buyer also takes on the company’s past work, including defect liabilities. See what to consider in a share sale.

How long does it take to sell a construction business?

Often 6 to 12 months from listing to settlement. Licensing, the novation of contracts and buyer finance tend to set the pace. A business with clean accrual accounts and a clear licence plan sells faster. See how long it takes to sell a business.

Do I need a formal valuation or an appraisal?

For a sale, a broker’s appraisal of market value is usually enough to set the asking price. A formal valuation is needed for partnership disputes, family law, tax or stamp duty purposes. See the difference between a valuation and an appraisal.

Selling a construction business

Keep reading

How to value a manufacturing businessFor fabrication and engineering businesses.
Selling as a going concernKeeping GST out of the sale price.
Selling to family or staffA common exit for trade businesses.
Selling confidentiallyKeeping staff and clients unaware until the right time.
Selling a business with BenchmarkHow our brokers take a business to market.

Other industries

Valuation guides by industry

Business valuations near you

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This guide is general information, not financial, legal or tax advice. Every business is different, so speak to a broker, valuer or accountant before setting a price.

Sources: ATO small business benchmarks for electrical services, plumbing services and carpentry services (2023–24 data); QBCC, licence requirements for companies, partnerships and trusts; Business Queensland, valuing a business to buy or sell; business.gov.au, sell your business. Checked 11 October 2026.