General & Excavating Contractor, Mississippi Heavy Civil

$2.4M

Revenue

$544K

SDE

12.9x

Multiple

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Full Editorial Writeup

This is a Mississippi-based heavy civil contractor building roads, bridges, levees, grading and excavation work, plus concrete and rock structures. Revenue runs through fixed-price contracts, some modified by incentive and penalty provisions, with project durations ranging from six months to two years. The company reports on a percentage-of-completion basis for financial statements and cash basis for taxes, which is standard for the sector but means real earnings quality lives inside work-in-progress schedules rather than a simple P&L.

The headline number here is asset-heavy. The $7M asking price explicitly bundles equipment carried at an original cost of $7,279,269 plus real estate valued at roughly $450,000. In other words, you are largely paying for a fleet of heavy iron and a yard, not a stream of goodwill. On $2.43M of revenue and $543,953 of cash flow, the 12.87x cash-flow multiple is misleading: this is an asset sale wearing an earnings-multiple costume.

The work itself is durable and essential. Roads, bridges, and levees get funded through public budgets and infrastructure spending that hold up better than discretionary construction in a downturn. The buyer question is not whether the demand exists, it is whether this specific fleet, backlog, and bonding capacity justify a price that sits at roughly parity with equipment cost before you credit a dollar of the operating business.

Why we like it

Earnings quality is anchored to fixed-price public-adjacent civil work: roads, bridges, and levees funded by infrastructure budgets rather than consumer sentiment. The $543,953 cash flow on $2.43M revenue is a healthy ~22% margin for heavy civil, though percentage-of-completion accounting means the real number depends on the WIP schedule.
The moat is capital and capability, not marketing. Heavy civil requires a large equipment fleet (carried at $7.28M original cost), bonding capacity, and licensed operators, which keeps casual competitors out and creates a genuine barrier to entry for the winner of this bid.
Infrastructure spending has structural tailwinds through federal and state highway, bridge, and levee funding. Mississippi flood control and road maintenance are recurring, non-discretionary needs that support a durable pipeline of fixed-price contracts.
For an operator who already runs iron or wants to enter civil, the asset base is a shortcut. You acquire a working fleet, a yard, and a live contract book rather than assembling equipment and bonding relationships from scratch.

How to improve it

Reprice the deal against the assets, not the cash flow. The $7M price sits at parity with the fleet's original cost plus real estate, so negotiate hard using current fair market value of the used equipment, since original cost overstates what worn iron is actually worth.
Rebuild the bid pipeline around margin discipline within the first 90 days. Audit which contract types (incentive-modified vs. straight fixed-price) actually delivered the 22% margin and steer future bidding toward those, cutting low-margin volume that ties up equipment.
Tighten equipment utilization and maintenance scheduling. A fleet this large is only worth its multiple if it is billing; implement telematics tracking and a preventive maintenance program to reduce downtime and defer capex on idle machines.
Formalize the bonding and banking relationships early. Larger civil contracts hinge on surety capacity, so meet the bonding agent in diligence and expand the single-project and aggregate bonding limits to bid bigger, higher-margin work.
Diversify the customer and contract mix. If revenue concentrates in a few public agencies, pursue private site work, subdivision grading, and disaster restoration to smooth the lumpy nature of six-to-twenty-four month projects.
Build a management layer so the business is not owner-dependent. Document estimating, project management, and safety processes so the operation can run and bid without the seller, protecting resale value and reducing key-person risk.

Diligence notes

Reconcile the two accounting bases immediately. Cash-basis tax reporting and percentage-of-completion financial reporting can diverge sharply, so pull the WIP schedule, look for over- and under-billings, and confirm the $543,953 cash flow is real earnings and not a timing artifact.
Get an independent equipment appraisal at fair market value. The $7.28M figure is original cost with accelerated depreciation for taxes; heavy iron depreciates fast, so the actual liquidation and going-concern value could be a fraction of that and directly resets the deal price.
Scrutinize backlog quality and contract terms. Review each active fixed-price contract for remaining margin, incentive and penalty clauses, retainage, and completion risk, since a single underwater fixed-price job can erase a year of profit.
Verify bonding capacity, licensing, and any pending claims or liens. Confirm surety limits, contractor licensing status, safety record (EMR), and whether any warranty, defect, or litigation exposure travels with the business.
Assess customer and project concentration. Determine how much revenue and cash flow depend on one or two agencies or a single large contract, because concentration turns a lumpy civil business into a fragile one if a key relationship walks.

Source

Originally listed on BizBuySell. View original listing →