A contractor business valuation is an estimate of the economic value of the business based on its financial performance, assets, liabilities, risk, customer relationships, and future prospects. The appropriate method depends on whether the business is being sold, transferred, financed, divided, or reviewed for planning purposes.

Insurance does not determine a business valuation by itself, but coverage gaps, claims history, contract requirements, fleet exposures, employee practices, and documented risk controls can affect a buyer's view of continuity and risk.

Information to prepare

Prepare several years of financial statements, tax returns, bank records, contracts, license information, equipment schedules, vehicle schedules, employee and subcontractor information, claims history, and current insurance policies. Explain unusual expenses, owner compensation, related-party transactions, one-time projects, and changes in backlog.

A buyer or valuation professional may also review customer concentration, recurring versus project-based revenue, gross margins by trade, work-in-progress, change orders, retainage, warranty obligations, pending disputes, and the strength of the estimating and project-management process.

Risk and insurance review

Review whether workers' compensation, general liability, commercial auto, tools and equipment, umbrella or excess, and other applicable policies reflect the actual operations. Confirm that certificates, additional-insured requests, contracts, payroll records, vehicle schedules, and loss runs are consistent. A policy review cannot guarantee a valuation outcome, but it can identify information that should be explained before a transaction or financing decision.

Speak with a qualified CPA, valuation professional, attorney, and insurance advisor for decisions specific to the business. Asena Capital can review the insurance portion of the risk profile through contractor insurance and coverage-specific pages.