What to Know About Conducting a Targeted Acquisition Search and Six Steps to Close the Deal
Acquiring another contractor can be one of the most effective ways to grow your business— especially when organic expansion slows or becomes less efficient. But like any major initiative, acquisitions require upfront planning, internal alignment, and the right search strategy to find companies that truly fit.
That’s where a Targeted Acquisition Search comes in.
What Is a Targeted Acquisition Search?
A Targeted Acquisition Search is a structured outreach program designed to help you find and engage companies that meet your growth objectives, even if they aren’t actively for sale.
Instead of relying on who you know or scrolling through listing websites, this approach focuses on direct, strategic outreach to the owners or executives at specific target contractors. It begins with clearly defining your goals and search criteria, then launching a wide-ranging outreach effort to identify and engage potential target companies.
Six Steps to Close the Deal
- Initial Planning and Self-Assessment
- Define Your Search Criteria
- Marketing and Outreach to Targets
- Initial Target Engagement and Qualification
- Offer and Negotiation
- Integration Planning, Purchase Agreement, and Closing
Why Companies Choose to Grow Through Acquisition
Many construction business owners pursue acquisitions for one or more of the following reasons:
- Geographic expansion: Enter new markets without opening a new office and needing to hire local estimators, superintendents, and project managers.
- Talent acquisition: Gain additional project team headcount or technical expertise needed to handle more projects or grow your service offerings.
- Capacity growth: Acquire the target contractor’s project teams, any specialized equipment, and ideally (depending on the financial status of the target) gain additional surety bonding capacity to execute more project volume.
- Cost efficiency: Consolidate both companies’ back-office functions such as subcontractor/vendor contracting, safety / risk management, and equipment procurement to reduce overhead costs.
- Diversification: Expand into new services and new customer sectors without having to re-assign your current team to new lines of work where they may not otherwise have experience.
The contractors best positioned to acquire are often those with strong leadership teams, solid financials, and the operational infrastructure to support growth.
What an Acquisition Process Looks Like
A successful acquisition starts with a thorough process. While every search is different, the approach follows a clear framework:
1. Initial Planning and Self-Assessment
Discuss your goals and capabilities:
- Why do you want to grow through acquisition?
- This will determine your search criteria.
- Consider what does a successful integration looks like.
- First and foremost, you want an acquisition that complements and enhances your current business. Think about your goals, but also the management and integration aspects.
- What resources will your team be able to commit to the process?
- This is one of the most short-changed aspects of integrations. There are three distinct aspects of an acquisition, and each may require different management talents and resources: 1) the actual search and acquisition, 2) the transition and integration of the acquired business and 3) realizing the synergies i.e. achieving your goals.
2. Define Your Search Criteria
Once you have set your goals the next step is to define your criteria for what a good-fit contractor looks like, such as:
- Revenue range and profitability
- This is impacted by your ability to finance the transaction and integrate the business – both more difficult as size goes up.
- Understand valuations in the construction industry subsector and plan to pay a fair price.
- Project focus (e.g., infrastructure, commercial, industrial, residential)
- Customer focus (e.g., public agencies, private owners, prime general contractors)
- Geographic preferences
- Capabilities
- Self-performing or subcontractor model
- If self-performing, which trades
- Union or non-union workforce
- In-house engineering / architecture or outsourced
- Cultural and operational compatibility
- Existing senior management team and transition readiness
3. Marketing and Outreach to Targets
Develop marketing materials that position your company as an attractive buyer and begin confidential outreach to potential targets. Depending on your search criteria, you may need to reach out to hundreds of potential targets to find the best fit contractors.
4. Initial Target Engagement and Qualification
Engage in discussions with interested owners, gather financial and operational data, and assess whether they meet your criteria. Maintain thorough notes on each target and track them through your process. Conduct regular reviews with your internal team and consider which targets are worthy of continued engagement and which can be declined.
5. Offer and Negotiation
If there’s mutual interest, structure and submit offers, conduct initial negotiations, and conduct due diligence, engaging your accounting, legal, and other advisors as necessary.
6. Integration Planning, Purchase Agreement, and Closing
As due diligence progresses, develop your integration plans, team roles, and responsibilities. Prepare the purchase agreement (likely with your legal counsel’s assistance), negotiate final terms with the target, and close the deal.
Although the general process is described here, the behind-the-scenes activities and hours required by your team to successfully conduct the search and get to closing should not be underestimated.
Realistic Expectations: What Results Can Look Like
In recent acquisition searches, BMI reached out to about 2,300 target companies. Of those, 80 owners responded and expressed interest in selling their company, or about 3%.
This is common in targeted acquisition searches. It’s a numbers game and the numbers highlight a key point: success depends on preparation, the volume of targets contacted, and persistent efforts to pursue those targets who want to engage with you. It’s not just about finding a company—it’s about finding the right one.
Lessons Learned
Some takeaways from past searches:
- Don’t rush the timeline. High-quality targets take time to engage.
- Transparency matters. Owners are more likely to respond when they understand who you are and why you’re reaching out.
- Low-ball offers rarely work. Sellers want fair value, especially if they’re being approached directly.
- Integration planning is key. Know in advance how you’ll align operations, people, and processes.
Is a Targeted Search Right for You?
If you’re considering acquisition as part of your growth strategy and want to engage the right companies—confidentially and strategically—a Targeted Acquisition Search can be a smart path forward. Given the time your management team needs to commit to effectively conduct the search and qualify target companies, you may consider retaining an external advisor to guide you through the process and handle much of the activity on your behalf.
About the Author
Jeff Shannon
Senior M&A Advisor, BMI Mergers & Acquisitions
25+ years of construction leadership experience
Certified Mergers & Acquisitions Advisor (CM&AA)
📧 jeffshannon@bmimergers.com
📞 +1 (610) 842-3693