Maintaining Surety Credit in Times of Growth and Transition
By Erik Mueller | March 4, 2021
This post is part of a series sponsored by Old Republic Surety.
Growth, expansion and acquisitions are all good, right? Not necessarily. Here’s what you need to know to keep your construction company in good standing with your surety company.
Most construction companies in the U.S. are owned by an individual or the members of a family. Yet, according to the Family Business Alliance, only 30% of family-owned businesses survive into the second generation, and just 12% remain viable into the third generation.
That means when owners are ready to retire, they likely will sell to someone outside the family. And with greater frequency, we’re seeing owners sell to private equity firms. From a surety’s perspective, that may not be a healthy sign. Most of the time, an acquirer’s aggressive growth philosophy is at odds with the steady, incremental growth we like to see in companies.