How Much Is a Concreting Business Worth?

What decides the value of a concreting business?

The profit the business can keep earning, how reliably the work comes back, and what it costs to keep the plant and crews that do it. Concreting adds a particular problem: the work is sold at a fixed price in large lumps against materials whose prices move, so reported profit can look strong or weak depending on when the jobs were quoted.

Slab work for volume and project builders usually sits in a few relationships held through a site manager. We measure revenue by builder over several years and ask what would happen to profit if one of them moved its work. Our guide on customer concentration and business value explains why this lowers value for a given profit. The factors are set out on our page on concreting business valuations. Every figure in this guide is illustrative and none is a benchmark.

Owners commonly quote, book pours with the batching plant, supervise on pour days and deal with builders. We deduct a market cost for those roles and ask who else could do them. Licensing for concreters differs by state and by contract value, and the work involves silica dust, manual handling and plant movement, so we also check the licences held, the safety systems and the workers’ compensation history.

Which margin should be used when jobs are fixed price?

The one the business actually achieves, checked against the one it quotes. Ready-mix concrete, reinforcing steel and fuel can rise after a quote is accepted, and the concreter carries the difference until the next price list. We ask for a quote register showing the margin quoted and the margin achieved on completed jobs, then look at whether new quotes have recovered the lost margin and whether builders accepted the new rates.

That tells us which margin to adopt: the achieved margin on work priced before the rise, the margin now being quoted, or a blend weighted by what is in the order book. It also shows whether a good year reflected pricing discipline or a lucky run of costs, and whether that discipline would survive a change of owner.

What does a worked example look like?

In this illustration slab and driveway revenue is $3,000,000. Costs rose after many jobs were quoted. The margin quoted on completed jobs was 20% and the margin achieved was 16%, a gap of $120,000 a year on that revenue. Part of the order book has since been priced at the new costs.

The margin chosen moves the answer a long way. Adopting the 16% achieved on the whole book would lower the value by $162,000, and adopting the 20% quoted would raise it by $198,000, both at the same multiple. That spread is why the quote register matters more than any rule of thumb.

Plant of $480,000 is about 78% of the $612,000, so most of what a buyer pays is backed by equipment. The $132,000 above it has to be supported by the customers, the finishers and the pricing discipline behind the earnings.

Are the pump and plant valued on top of the business?

Not where the business is valued on its earnings, because the plant is what produces them. Concrete pumps, laser screeds, power trowels, skid steers and formwork matter twice, though. They have to be kept current, which is a cost that tax depreciation may not show. And in a business with a pump fleet, their market value gives a reference point beneath the earnings value. In a pumping business the fleet is a large part of what is being bought.

We look at age, hours, condition, finance owing and replacement cost. Finance owing is deducted only when moving from the value of the business to the value of the owner’s equity. Our guide on whether equipment adds to business value explains the distinction.

Weather affects how hard the plant works. Rain stops a pour, and heat and wind shorten finishing time, so we ask what lost days cost in wages and plant and how often pours are cancelled or rebooked. Slabs are claimed in stages or on completion while wages, concrete and plant costs are paid first, so we also look at payment terms, retentions held and debtor ageing.

How do defects and cracking claims affect the value?

A pour cannot be redone cheaply. Cracking, curling, surface scaling and settlement claims can arrive long after a job is paid, and the cause is often disputed between design, subgrade preparation, curing and workmanship. We look at the claims history, how disputes were settled, warranty terms and the records kept, such as pour records, test results and photographs.

A single resolved dispute is normally treated as a one-off. A pattern points to a quality problem that a buyer will price in. We also ask whether the business reads the plans, records site conditions and declines unsuitable subgrades, or simply pours what it is given. Skilled finishers matter here: we check who they are, how long they have stayed and how they are paid. Many concreters use subcontract gangs paid per square metre, and how those arrangements should be classified is a question for your accountant or lawyer.

What reduces the value of a concreting business, and what increases it?

What tends to reduce value

• One or two builders supplying most of the slab work at tight margins.
• Quoted margins that are not achieved, or no record of the difference.
• Old, heavily financed plant. The cost of renewal falls on the buyer.
• Open or repeated cracking claims, and a thin record of how jobs were built.

What tends to increase value

• A spread of builders, plus commercial or civil work on progress claims.
• Skilled finishers and foremen who have stayed and can run pour days without the owner.
• Well-kept plant, and a pumping stream that has its own customers.
• Pour records and test results that show quality and help answer claims.

What should you prepare before a concreting business valuation?

The quote register comes first, because it decides which margin is adopted. The most useful items are:

• Revenue by segment, covering residential slabs, driveways and decorative, commercial, civil and pumping, and by builder for three years.
• A quote register showing quoted against achieved margin on completed jobs, with concrete and steel supplier pricing history.
• A plant schedule with hours, condition and finance owing.
• Employed crew and subcontract gang lists with pay basis, tenure and insurance.
• A defect and cracking claims register, how each was resolved, and pour records for a sample of recent jobs.
• Work in progress, progress claims, retentions and debtor ageing by builder.

If you are a tradie weighing up a sale, a foreman buying in or a partner leaving, an independent valuation sets out the margin adopted and the reasoning in writing. Our pages on business sale and shareholder transfer valuations explain what the report needs to address. An Independent Business Valuation is $1,995 + GST, and you can start online.