Insights

Construction companies routinely work with retainage provisions that allow project owners to withhold a portion of payment until specific contractual obligations are satisfied. While retainage serves an important purpose in managing project risk, it can also affect how a company’s financial position is presented. Recent guidance from the Financial Accounting Standards Board (FASB) provides additional clarity on how retainage should be presented and disclosed under ASC 606, helping contractors better understand the financial impact of these balances.

Construction business owners often focus heavily on revenue growth, but valuation experts look deeper into how efficiently a company converts work into profit. Buyers, lenders, and investors want to see stable operations, disciplined financial management, and the ability to maintain profitability through changing market conditions. Metrics tied to pricing, productivity, backlog, and operational efficiency all contribute to a construction business’s value.

Material price volatility has become one of the most significant financial pressures construction businesses face in 2026. Prices for key inputs such as steel, lumber, concrete, and copper are increasing between 5% and 50% in many markets. For contractors operating under fixed price agreements, those swings can quickly turn profitable projects into financial liabilities.