Spring 2007 issue of Horizons

knowledge. commitment. value. CERTIFIED PUBLIC ACCOUNTANTS AND BUSINESS CONSULTANTS

and impacting the financial results of the current year.

KEY MAN RISK Closely-held contractor owners can be very hands- on executives involved in the specific projects and relationships that drive their businesses. This high level of involvement can create greater risk to the business if it is so dependent on one or two key executives. ASSET INTENSITY The degree to which assets (primarily equipment) are required in a company impact the valuation. Some contractor businesses require minimal equipment. For example, general contractors may not self-perform much of their work. These businesses can adjust to changes in the business cycle easier, as they are not forced to purchase and hold significant levels of machinery. Conversely, other contractors do require a significant level of equipment. This equipment generally is financed with debt, increasing the risk level of these contractors because they have a higher level of fixed costs due to debt load. The question of what your contracting business is worth may only come along once in its life cycle. However, when it does come along, being prepared to answer that question will be very important. Contracting businesses pose their own specific issues and challenges in determining value.

Questions? Contact:

Frank Hogg, CPA Partner-in-Charge Contractors Services Group 314.290.3413 frank.hogg@rubinbrown.com or Dale Lash, CFA Partner-in-Charge Business Valuation Group 314.290.3261 dale.lash@rubinbrown.com

18 u summer 2007 issue