Construction Sell-Side

QoE & Sell-Side Prep for Construction Companies

Every construction QoE starts and ends in the same place: the WIP schedule. It's where profit gets recognized, misrecognized, or borrowed from next quarter, and a buyer's diligence team can read it like a polygraph. Best to have yours telling the truth first.

Busy construction site with cranes and a building under construction

What a buyer is really paying for

A construction buyer is paying for a quality backlog and the ability to earn the margins you've booked on it. Unlike a service company, your value isn't a recurring contract base — it's the pipeline, the profitability of jobs in progress, and whether your percentage-of-completion accounting reflects work actually done rather than work you're optimistic about.

That makes the WIP schedule the center of gravity. Overbillings and underbillings, estimated costs to complete, retainage, and change orders that were performed but never booked — this is where reported profit is most often overstated or understated, and it's the first thing a buyer's QoE firm reconciles. Fixing it beforehand keeps a normal construction reality from reading as a warning sign.

EBITDA matters, but for a construction company it's EBITDA supported by a reconciled WIP schedule that determines whether a buyer trusts the earnings.

Add-backs, WIP, and bonding

The standard add-backs apply — above-market owner comp, personal vehicles, relatives on payroll, one-time equipment — and each raises adjusted EBITDA when documented well enough to survive scrutiny. But the larger swing is the job-cost accounting: recognizing revenue as work is completed, capturing change orders, accounting for retainage, and making sure no single underwater job is quietly distorting the margin picture.

We reconcile the WIP schedule to the general ledger, test percentage-of-completion against actual costs, normalize owner expenses, and present earnings tied to real completed work — so a buyer isn't left wondering whether this year's profit was borrowed from jobs not yet finished.

How Kaizen runs it

We run a diligence-grade scan of your trailing twelve months, rebuild and reconcile the WIP schedule, test percentage-of-completion against actual job costs, account for retainage and change orders, normalize owner comp and personal expenses, and build the Reported-to-Adjusted EBITDA bridge a buyer's QoE firm will respect. You get a workbook, a narrative memo, and a clean-up list of the things to fix before the buyer's team finds them.

The goal: hand a buyer a job-cost story that ties out, so diligence confirms your margins instead of unwinding them.

What's included

Trailing-twelve-month Reported → Adjusted EBITDA bridge with support for every add-back
WIP schedule rebuilt and reconciled to the GL: overbillings, underbillings, costs to complete
Percentage-of-completion revenue tested against actual job costs
Retainage and change orders identified and properly recognized

Backlog quantified and margin-tested so the pipeline's quality is visible
Customer and project concentration analysis (buyers ask — have the answer ready)
Owner compensation and personal expenses normalized as documented add-backs
Narrative QoE memo plus a defensible workbook you can hand to advisors

This pairs with the 1-2-3 CFO™ Reset if the books need work first — there's no point testing WIP on a ledger that isn't reconciled.

Pricing

From $15,000one-time sell-side QoE engagement · scoped to size and book quality

3–5x EBITDAa common range for construction companies — a clean, reconciled WIP schedule is what defends it

WIP that tiesover/underbillings, retainage, and costs-to-complete reconciled, so reported profit is real

Fewer surprisesissues found and fixed before diligence, not renegotiated after

Straight answers

Why is the WIP schedule such a big deal?

Because it's where a contractor's profit is recognized early or late. A buyer's core fear is paying for earnings that were really borrowed from future jobs. A reconciled WIP schedule that ties to the GL removes that fear — and removing it protects your multiple.

Isn't this what the buyer's QoE firm does anyway?

They do it to protect the buyer, and every adjustment they make lowers your price. Sell-side prep runs it first, on your side, so the WIP and the EBITDA are defensible before they arrive.

How far ahead of a sale should we start?

Ideally 6–12 months. Job-cost and change-order habits take time to clean up, and it's far better to fix them while it looks like discipline than to patch them under a buyer's deadline.

Most of my revenue is a few large projects. Does that lower the value?

It concentrates the risk, which a buyer will price. We show the concentration and the margin history clearly, so they underwrite the real risk rather than assume the worst-case version of it.

Free 20-minute books assessment

We'll show you the five things we'd fix first in your books — useful whether you hire us, hire someone, or do neither.

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Or call us directly: +1 786 789 0969