Planning for Exit or Succession? Why Your Financial Story Matters Most

Introduction - Planning for Exit or Succession

Every construction or engineering business tells a story. Not just through the projects delivered or the buildings left standing, but through the numbers that sit behind them. When it comes to exit planning or succession, your company’s financial story becomes the most important tool you have. Potential buyers, investors, or even family members stepping into leadership won’t just look at your legacy, they’ll look at your books.

At Jones Financial Accounts (JFA), we’ve seen too many directors wait until the last minute to get their finances in order. The result? Missed opportunities, lower valuations, or difficult handovers. The truth is this: the earlier you prepare your financial story, the smoother and more profitable your exit or succession will be.

In this blog, we’ll break down the key elements of building a financial story that strengthens your business value, reassures successors, and maximises your return.

Building Your Financial Story

Clean and Credible Accounts

Buyers or successors want to see reliable accounts. That means no missing invoices, no unexplained costs, and no late filings. Clean accounts tell a story of discipline and control, a business that’s managed properly and ready to be taken over.

Every SME, especially limited companies in construction or engineering, needs this. For firms with turnover above £500k, year-end accounts alone aren’t enough. Buyers expect accurate management accounts to back them up.

A £2m-turnover engineering company prepared to sell but had years of inconsistent bookkeeping. At JFA, we rebuilt three years of management accounts, proving steady growth and strong margins. This added credibility lifted their valuation.

Many directors assume that statutory accounts filed at Companies House are enough. In reality, buyers and investors want detailed, reliable management accounts, the real heartbeat of the business.

Cash Flow Tells the Truth

Profit looks good on paper, but cash flow tells the real story. A buyer or successor needs to know the business can pay its bills, fund growth, and manage delays common in construction. Strong cash flow reporting reassures them the business is resilient.

SMEs with contracts, stage payments, or retentions, which is almost every construction firm. Engineering businesses bidding for larger tenders also benefit from demonstrating predictable cash flow.

A contractor with £1.5m turnover showed £300k profit but struggled with delayed payments. By implementing 13-week rolling cash flow forecasts, we demonstrated how they managed working capital effectively. This made them more attractive to investors, securing a smoother sale.

Some directors believe “as long as the business is profitable, buyers will be happy.” In reality, cash flow reliability often carries more weight than headline profits.

Project Profitability Analysis

In construction and engineering, overall profits can hide weak projects. Project profitability reporting shows how each contract performs. Buyers want evidence that systems exist to manage costs, labour, and variations, not just overall figures.

SMEs running multiple contracts or sites. For firms above £1m turnover, project profitability is a non-negotiable part of financial storytelling.

A £3m turnover groundworks firm tracked all projects as one lump figure. After introducing job costing and project profitability reports, they identified one site losing £40k due to poor variations control. Fixing this improved margins and gave potential buyers confidence in the management team’s ability to run projects profitably.

Many believe buyers won’t dig into individual projects. The truth is, they almost always do, and weaknesses here can reduce your valuation significantly.

Reducing Overheads and Waste

High overheads, duplicate software, or unnecessary admin are red flags for buyers. A lean, efficient business shows discipline and improves valuation. Succession planning also becomes easier when systems are streamlined.

All SMEs, but particularly those with office-heavy functions or admin spread across multiple people.

An East Midlands construction SME reduced overheads by £50k a year by outsourcing finance. This leaner structure not only improved margins but also reassured successors the business could run profitably without the founder’s hands-on involvement.

Some directors think “buyers will cut costs themselves.” In reality, buyers pay more for businesses that already run efficiently, because they see less risk.

Telling a Consistent Story With KPIs

Key Performance Indicators (KPIs) bring your financial story to life. Metrics like gross margin %, debtor days, labour utilisation, and cost-to-complete tell buyers or successors how well the business is managed day-to-day. Consistency across KPIs demonstrates stability and control.

SMEs with leadership teams, multiple directors, or ambitions to sell within 3–5 years.

A £5m turnover civil engineering firm introduced KPIs into monthly board packs. Over two years, consistent reporting proved improvements in debtor days (from 72 to 55) and margins (from 15% to 19%). When it came time to plan succession, the numbers told a clear, positive story, easing negotiations.

Many owners believe KPIs are only for “big corporates.” The reality is, SMEs that measure and report KPIs consistently are more attractive to buyers and easier to transition to new leadership.

Key Takeaways

• Exit or succession planning starts years before you’re ready to step away.

• Clean accounts, reliable cash flow, and project profitability reporting are essential.

• Reducing overheads and waste boosts valuation and reassures successors.

• KPIs tell a consistent financial story that buyers and investors trust.

• Your financial story is your legacy, prepare it early to maximise value.

If you’re thinking about succession or planning your exit, start by telling your financial story clearly. At JFA, we help construction and engineering SMEs prepare accounts, forecasts, and reports that not only protect your legacy but maximise your return.

Wrapping up today's insights, tomorrow we simplify another accounting challenge.