Acquisitions Anonymous - #1 for business buying, selling and operating Inside a Miami Contractor Sale: Hidden Accounting Traps & Big Backlog
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Nov 21, 2025 In this discussion, Josh Tonneson, an accounting expert from Tonneson Accounting Services, navigates the complexities of a $23 million acquisition involving a Miami contractor. They delve into the contractor’s impressive $52 million backlog and scrutinize its reported EBITDA versus actual cash flow. Josh highlights potential pitfalls like deferred revenue and WIP accounting traps, while the hosts explore the implications of contract transferability and financing requirements. A treasure trove of insights for anyone in the M&A space!
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Backlog Versus Low Capital Footprint
- The listing markets the company as a capital-light specialty contractor with $41M revenue and $52M backlog.
- That combination implies strong recurring institutional work but raises questions given only $100k in FF&E and 53 employees.
Long Contracts Drive Visibility — Transfer Risk
- The company claims 80–85% of revenue from renewable 3–5 year institutional contracts, providing visibility and less open bidding.
- Those contracts likely drive the backlog but may be non‑assignable or have change‑of‑control clauses that threaten transferability.
DBE Status Can Create Nontransferable Backlog
- Bill described DBE and minority set‑asides in government work where small specialty firms win large federally funded contracts.
- He warned that such status may not transfer and can leave a buyer unable to assume those relationships.