A field-ready LOI framework built for the realities of buying a trade contractor — covering equipment valuation, backlog contingencies, key-man risk, and seller transition terms that protect your investment from day one.
Acquiring a concrete or masonry contracting business requires an LOI that goes well beyond a standard business purchase template. These are project-based, equipment-intensive businesses where the value sits in signed backlog, crew capability, and an equipment fleet that may range from a $15,000 skid steer to a $400,000 concrete pump truck. A well-drafted LOI signals to the seller that you understand the industry, creates a clear framework for due diligence, and locks in the deal structure before you invest significant time and capital into closing. This guide walks you through every section of a concrete and masonry LOI — what to include, how to phrase it, and where deals in this industry most commonly fall apart during negotiation.
Find Concrete & Masonry Businesses to AcquirePurchase Price and Valuation Basis
State the proposed purchase price, the valuation methodology used to arrive at it, and how SDE or EBITDA was calculated. Concrete and masonry businesses typically trade at 2.5x–4.5x SDE. Specify whether the price is based on trailing twelve months, a three-year average, or a weighted average, and note any normalization adjustments for owner compensation, personal vehicle use, or non-recurring project costs.
Example Language
Buyer proposes to acquire substantially all assets of [Business Name] (the 'Company') for a total purchase price of $[X], representing approximately [3.2x] of the Company's trailing twelve-month Seller's Discretionary Earnings of $[X], as adjusted for owner compensation normalized to $[X], personal vehicle expenses of $[X], and non-recurring equipment repair costs of $[X] incurred in [Year]. The purchase price is subject to adjustment based on findings during the due diligence period, including final equipment appraisal and working capital verification.
💡 Sellers in concrete and masonry frequently push back on SDE normalization, particularly around equipment depreciation and owner vehicle add-backs. Be prepared to show your work with a clear add-back schedule. If the seller has significant cash transactions or informal bookkeeping, build in explicit language that the purchase price is contingent on the financials being verified to the buyer's satisfaction. Avoid agreeing to a fixed price before you have reviewed three years of tax returns and the equipment inventory.
Asset vs. Entity Purchase Structure
Specify whether the transaction is structured as an asset purchase or a stock purchase. The vast majority of concrete and masonry acquisitions are structured as asset purchases, which allows the buyer to avoid inheriting unknown liabilities including mechanic's liens, unresolved insurance claims, OSHA violations, or bonding issues tied to prior projects.
Example Language
This transaction is contemplated as an asset purchase, in which Buyer will acquire the following assets of the Company: all tangible equipment and vehicles as listed on the attached Exhibit A, customer contracts and project backlog, trade names and goodwill, transferable permits and licenses, and all intellectual property including estimating templates and job costing systems. Buyer will not assume any liabilities of the Company except for obligations arising under assigned contracts after the closing date. Seller retains all pre-closing liabilities including accounts payable, outstanding liens, and any pending claims or litigation.
💡 Sellers sometimes prefer a stock sale for tax efficiency, particularly if they hold significant built-up value in an S-Corp or LLC. Be prepared to discuss the tax implications and, if you consider a stock purchase, insist on representations and warranties insurance or a meaningful seller indemnification escrow held for 18–24 months to cover pre-closing liabilities including potential mechanic's liens filed by subcontractors on prior jobs.
Equipment and Vehicle Valuation
Define how the equipment fleet will be valued and what happens if the appraised value differs from the seller's stated value. Equipment is often the single largest asset in a concrete or masonry acquisition, and sellers frequently overvalue aging equipment based on replacement cost rather than fair market value in continued use.
Example Language
The purchase price includes all equipment and vehicles as listed in the Equipment Schedule attached as Exhibit A, with an aggregate stated value of $[X]. Buyer reserves the right to commission an independent equipment appraisal by a qualified third-party appraiser within [30] days of the execution of this LOI. In the event the appraised fair market value of the equipment fleet is more than [10%] below the stated value in Exhibit A, the parties agree to negotiate in good faith a corresponding adjustment to the purchase price. Equipment with deferred maintenance costs exceeding $[X] per unit will be excluded from the purchase or subject to a negotiated repair credit at closing.
💡 Push the seller to provide maintenance logs, service records, and current registration for every vehicle and piece of equipment before you engage an appraiser. Pay close attention to concrete pump trucks, forming systems, and mixers — these are high-cost assets that can deteriorate quickly under heavy use. Budget $3,000–$8,000 for a qualified equipment appraisal on a mid-size fleet and treat it as non-negotiable. Sellers who resist an independent appraisal are often aware of hidden maintenance issues.
Working Capital and Accounts Receivable
Define the working capital target, how accounts receivable will be handled at close, and whether retainage from prior projects is included in or excluded from the purchase price. Construction businesses frequently carry significant retainage that may not be collected for 90–180 days after project completion.
Example Language
The purchase price assumes a normalized working capital target of $[X], defined as current assets less current liabilities as of the closing date, excluding cash and debt. Accounts receivable outstanding for fewer than [90] days as of the closing date will be included in the purchase at face value, subject to verification of collectability. Retainage receivable on completed projects will be [included/excluded] from the purchase and [collected by Seller post-close / transferred to Buyer at a [X%] discount to face value]. Any AR aged beyond 90 days will be excluded from the transaction and retained by Seller for collection.
💡 Retainage is a common point of contention in construction acquisitions. If you accept retainage receivable as part of the purchase, build in a true-up mechanism if the retainage is not collected within 180 days post-close. Do not pay full value for AR from GCs or developers with known payment issues — ask the seller for a client-by-client payment history before finalizing the working capital target.
Project Backlog and Pipeline Contingency
Establish that the purchase price is conditioned on verified backlog meeting a minimum threshold and that a material shortfall in signed contracts will trigger a price adjustment or deal termination right. This is one of the most critical protections for a concrete or masonry buyer.
Example Language
Buyer's obligation to close is conditioned on the Company demonstrating a verified project backlog of no less than $[X] in signed contracts or purchase orders with an estimated gross margin of no less than [28%], as of the date that is [10] business days prior to the scheduled closing date. Verbal commitments, unsigned proposals, and speculative bids shall not be counted toward the backlog threshold. In the event verified backlog falls below $[X] or gross margin falls below [25%], Buyer may, at its sole discretion, renegotiate the purchase price, extend the closing date, or terminate this LOI and receive a full refund of any deposits paid.
💡 Sellers in concrete and masonry often cite backlog numbers that include unsigned proposals, GC verbal commitments, and repeat customer assumptions. Require signed contracts or written purchase orders. Build the backlog contingency threshold based on what you need to service debt from day one — if your SBA debt service is $20,000/month, you need enough backlog to generate that margin within the first 90 days of ownership.
Seller Transition and Non-Compete
Specify the length and scope of the seller's post-closing transition commitment, the compensation structure for that transition, and the geographic and temporal scope of the non-compete agreement. In concrete and masonry, the seller's relationships with general contractors and developers are the business — a poorly structured transition can destroy value within 60 days of close.
Example Language
Seller agrees to remain engaged with the Company for a transition period of [12] months following the closing date, with the first [6] months as a full-time employee or consultant at a rate of $[X] per month, and the remaining [6] months available for part-time consultation at [X] hours per month at a rate of $[X] per hour. During the transition, Seller will introduce Buyer to all active GC and developer relationships, participate in estimating on bids over $[X], and accompany Buyer on job site visits with key foremen and crew. Seller agrees to a non-compete agreement for a period of [4] years within a [75]-mile radius of the Company's primary service area, covering concrete and masonry contracting services.
💡 Sellers who are retiring often accept longer non-competes without much resistance — they have no intention of re-entering the market. For sellers exiting due to burnout, a 12-month full-time commitment may be difficult; consider a tiered structure where full-time engagement phases down to advisory. Four years and 75 miles is a reasonable starting position for most markets. In rural or low-density markets, expand the radius. Confirm the non-compete is enforceable under your state's law before finalizing.
Earnout Structure
If an earnout is included in the deal structure, define the earnout metric, the measurement period, the payment schedule, and the buyer's obligations to operate the business in good faith during the earnout period. Earnouts in concrete and masonry are most appropriate when backlog is uncertain or the seller is asking for a price that exceeds what current cash flow can support.
Example Language
In addition to the base purchase price of $[X] payable at closing, Buyer agrees to pay Seller an earnout of up to $[X] over a [18]-month period following the closing date. The earnout will be calculated as [X%] of gross revenue in excess of $[X] per measurement period, provided that gross margins on measured revenue exceed [27%]. Earnout payments will be made [quarterly] within [30] days of the end of each measurement period, accompanied by a revenue and margin report. Buyer agrees not to take actions during the earnout period that are specifically designed to reduce earned revenue, including deferring bids, declining qualified projects, or materially reducing the estimating and sales effort.
💡 Sellers in project-based businesses are often skeptical of earnouts because they depend on the buyer's continued sales effort and operational execution. To make an earnout palatable to a concrete contractor seller, tie it to gross revenue rather than net income or EBITDA, which the buyer controls more directly. Include a buyer good-faith covenant and give the seller quarterly reporting rights. Cap the earnout at no more than 20–25% of the total deal value to keep the base purchase price meaningful.
Due Diligence Period and Exclusivity
Define the length of the due diligence period, the scope of information the seller must provide, and the buyer's exclusive negotiating rights during that window. Concrete and masonry due diligence must cover financial records, equipment, backlog, labor, bonding, and insurance — budget adequate time.
Example Language
Upon execution of this LOI, Seller grants Buyer exclusive negotiating rights for a period of [60] days (the 'Due Diligence Period'), during which Seller will not solicit, negotiate, or accept offers from any other prospective buyer. During the Due Diligence Period, Seller agrees to provide Buyer with: (i) three years of tax returns and internally prepared financial statements, (ii) complete equipment inventory with maintenance records and lien status, (iii) current project backlog with signed contracts and margin estimates, (iv) employee roster with compensation, tenure, and role descriptions, (v) bonding line documentation and current certificate of insurance, (vi) customer list and contract history for the top 20 clients by revenue, and (vii) any pending litigation, claims, or regulatory notices. Buyer may extend the Due Diligence Period by [15] days upon written notice if additional information is required.
💡 Sixty days is the practical minimum for a thorough concrete and masonry acquisition — equipment inspection, financial verification, and backlog review each require dedicated time. Do not let a seller pressure you into a 30-day window unless the business is very small and simple. Use the first two weeks for financial review, weeks three and four for equipment appraisal and job site visits, and the final two weeks for legal review and lender engagement. Always include a cure period in case the seller is slow to produce documents.
Financing Contingency
State whether the buyer's obligation to close is conditioned on obtaining SBA or other financing, the amount of financing sought, and the lender approval timeline. SBA 7(a) financing is the most common structure for concrete and masonry acquisitions in the $1M–$5M range.
Example Language
Buyer's obligation to close this transaction is contingent upon Buyer obtaining a commitment for SBA 7(a) financing in an amount of no less than $[X], on terms acceptable to Buyer, within [45] days of the execution of this LOI. Buyer agrees to submit a complete SBA loan application within [10] business days of LOI execution and to pursue financing in good faith. In the event Buyer is unable to obtain a financing commitment within the stated period despite good-faith efforts, Buyer may terminate this LOI and receive a refund of any deposits paid. Seller acknowledges that SBA lenders will require access to Company tax returns, financials, and equipment records as part of the lender's underwriting process.
💡 SBA lenders underwriting concrete and masonry acquisitions will heavily scrutinize the equipment collateral, backlog quality, and the seller's financial records. If the seller has significant cash transactions or inconsistent tax returns, lender approval can be delayed or denied. Have an honest conversation with the seller early about what the bank will require — surprises during lender underwriting are one of the top reasons concrete contractor deals collapse. Consider engaging an SBA-experienced broker or lender before LOI execution to pre-qualify the deal structure.
Deposit and Good Faith Commitment
Define the earnest money deposit amount, the conditions under which it is refundable, and where it will be held during the due diligence period.
Example Language
Upon execution of this LOI, Buyer will deposit $[X] (the 'Deposit') into an escrow account held by [Escrow Agent / Buyer's Attorney]. The Deposit will be fully refundable if Buyer terminates this LOI during the Due Diligence Period for any reason disclosed in due diligence, including but not limited to equipment valuation shortfalls, backlog deficiencies, financial record inconsistencies, or failure to obtain financing. Upon expiration of the Due Diligence Period, if Buyer elects to proceed to closing, the Deposit will become non-refundable except in the event of Seller's material breach of representations. The Deposit will be applied toward the purchase price at closing.
💡 Deposits in lower middle market trade contractor acquisitions typically range from $10,000–$50,000 depending on deal size. For a $2M–$4M concrete business, $25,000–$40,000 is a reasonable expectation. Keep the deposit refundable through the full due diligence period — never agree to a hard, non-refundable deposit before you have seen the equipment, reviewed the financials, and confirmed the backlog. Sellers who demand a large non-refundable deposit upfront are often aware of issues they have not disclosed.
Equipment Appraisal Rights and Price Adjustment Mechanism
Negotiate an explicit right to commission an independent equipment appraisal and a defined formula for purchase price adjustment if the appraised value differs materially from the seller's stated value. Concrete and masonry equipment — pump trucks, mixers, forming systems, skid steers — depreciates unevenly and can carry significant hidden maintenance costs. Without this protection, buyers routinely overpay for aged fleets that require $100,000+ in near-term capital expenditure.
Backlog Verification and Closing Condition
Establish a minimum signed-contract backlog threshold as a formal closing condition. The purchase price for a concrete contractor is implicitly underwritten by the assumption that work continues — if backlog collapses between LOI and close due to a lost GC relationship or delayed project, the business is worth materially less. Define backlog as signed contracts only, set a floor tied to your debt service needs, and include a price adjustment or termination right if the threshold is not met within 10 business days of the scheduled closing.
Key Foreman Retention and Employment Commitments
Negotiate seller obligations to assist in retaining key foremen and crew through and beyond the closing date. Skilled concrete finishers and experienced masonry foremen are scarce and often follow the owner's lead on whether to stay with a new buyer. Request that the seller make written introductions, participate in crew meetings before close, and support retention incentives such as signing bonuses funded partially by the seller through a purchase price holdback or seller credit.
Seller Note Terms and Subordination
If the deal includes a seller carry note, negotiate the interest rate, repayment term, subordination to SBA debt, and conditions under which payments can be deferred. SBA lenders require seller notes to be fully subordinated on standby for the first 24 months of the loan. Clarify this with the seller before LOI execution — many sellers in concrete and masonry are not aware of the standby requirement and may resist it once they engage their attorney. A typical seller note for this industry runs 5–7% interest over 5–7 years.
Representations and Warranties Scope for Bonding and Liens
Negotiate broad seller representations covering bonding capacity, the absence of undisclosed liens on equipment or real property, no pending mechanic's lien claims from subcontractors on prior projects, and current status of all required contractor licenses. Concrete and masonry contractors frequently work as subcontractors on commercial projects where lien disputes arise months after project completion. Without specific representations and a meaningful indemnification holdback, the buyer can inherit legacy lien exposure that surfaces after the deal closes.
Find Concrete & Masonry Businesses to Acquire
Enough information to write a strong LOI on day one — free to join.
Concrete and masonry contracting businesses in the lower middle market typically trade at 2.5x–4.5x Seller's Discretionary Earnings. Where a business lands in that range depends on several factors: the quality and length of the signed project backlog, whether the business has experienced foremen who operate independently from the owner, the condition and age of the equipment fleet, and whether revenue is diversified across multiple GC and commercial clients. A business with $500K SDE, three independent foremen, a $1.2M signed backlog, and a well-maintained equipment fleet will command a premium multiple. A similar SDE business with heavy owner dependency, aging equipment, and one GC driving 50% of revenue will trade at the low end.
Most concrete and masonry acquisitions take 90–150 days from executed LOI to closing when SBA financing is involved. The critical path is usually the lender's underwriting timeline — SBA 7(a) loans for trade contractor acquisitions typically take 45–75 days to reach conditional commitment once a complete package is submitted. Allow 60 days for due diligence running concurrently with lender processing, and budget an additional 2–3 weeks for final document drafting and closing logistics. Deals with clean financials, a clear equipment inventory, and a cooperative seller who provides documents promptly close faster. Deals with informal bookkeeping or equipment disputes routinely push past 150 days.
Earnouts make sense in concrete and masonry acquisitions when the seller is asking for a price that current cash flow cannot fully support, or when there is meaningful uncertainty about whether the project pipeline will hold up post-transition. If the business has strong signed backlog, verified financials, and experienced foremen who can run jobs without the seller, a straight acquisition at a fair multiple is cleaner for both parties. If the seller's relationship with two or three GCs is the primary source of work and those relationships have not yet been introduced to you as the buyer, an earnout tied to gross revenue over the first 18 months can bridge the gap between seller expectations and buyer risk tolerance. Keep earnout metrics simple — gross revenue above a threshold is easier to verify and less susceptible to manipulation than net income or EBITDA.
Before signing an LOI for a concrete or masonry business, request at minimum: three years of business tax returns, three years of profit and loss statements, a current balance sheet, a detailed equipment list with purchase dates and estimated current values, a current project backlog report showing signed contracts and estimated margins, and the last 12 months of bank statements. These documents allow you to verify SDE, assess revenue trends, understand equipment investment, and evaluate backlog quality before you are committed to exclusivity. If the seller will not provide tax returns or bank statements before LOI, treat that as a significant red flag — it usually signals that the financials will not support the asking price once you see the actual numbers.
The most effective protection is a combination of an independent equipment appraisal, specific seller representations in the purchase agreement, and a post-closing indemnification holdback. Commission a qualified third-party equipment appraiser to physically inspect every piece of equipment in the fleet and document condition, deferred maintenance needs, and fair market value. Include explicit seller representations in the definitive purchase agreement stating that all equipment is in good working order, all maintenance is current, and there are no undisclosed liens or encumbrances on any vehicle or piece of equipment. Hold back $50,000–$100,000 of the purchase price in escrow for 12–18 months post-close as a fund against undisclosed equipment liabilities. This combination gives you a verified baseline, legal recourse if representations prove false, and a funded remedy if problems emerge.
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