Why Selling Bonded Contractor Businesses to Private Equity Is Difficult - And How Golden Shield Can Help

At first glance, contractor businesses with solid revenues, recurring projects, and long-standing reputations might seem like attractive acquisition targets. But when bonding requirements enter the picture, particularly for contractors who bid on public or large-scale private jobs, private equity buyers often pause, or walk away entirely.

Selling a bonded contractor business is anything but straightforward. Here’s why these businesses present unique challenges in a private equity transaction and how Golden Shield Business Brokers can help navigate the complexities to achieve a successful sale.

The Bonding Barrier: Why PE Firms Get Cold Feet

1. Bonding Capacity Doesn’t Transfer Automatically

In the world of contracting, bonding is everything. But bonding capacity isn’t an asset that transfers cleanly with a change in ownership, it’s typically tied to the financials and personal guarantees of the existing owner. When a private equity firm steps in, the bonding company will usually require a complete reassessment of the business, often leading to:

• A reduction or loss of bonding capacity

• Stricter underwriting standards

• Delays or even denials on future jobs

2. Most PE Firms Will Not Sign Personal Guarantees

Sureties often expect personal indemnities from business owners or key stakeholders, a nonstarter for most private equity groups. These firms are backed by institutional investors like insurance companies, pension funds, and university endowments. Signing personal guarantees exposes those entities to unacceptable liability, and in many cases, their internal policies outright prohibit it.

3. Complex Corporate Structures Create More Risk for Sureties

Private equity transactions often involve layered holding companies, management companies, and various financial entities stacked between the operating contractor and the ultimate parent. For a surety, this creates murkiness around who’s truly in control and who’s financially responsible. The more complex the ownership structure, the more likely a bonding company will see red flags, or walk away altogether.

4. Earnouts and Contingent Structures Are Hard to Implement

PE buyers often structure deals with earnouts, seller financing, or deferred payments to bridge valuation gaps. But for bonded contractors, these structures can create serious friction. The surety may view them as signs of financial instability or uncertainty in leadership, which can directly impact bonding capacity and the ability to bid on future projects.

Why Golden Shield Business Brokers Is Different

Selling a bonded contractor business requires more than putting a listing on the market, it requires strategy, deep industry knowledge, and the ability to speak both the buyer’s and bonding company’s language. That’s where Golden Shield delivers unique value.

✅ Industry-Savvy Buyer Matching

We don’t just pitch to generalist buyers. Golden Shield has access to a network of industry-aware acquirers, including operating companies and strategic investors with experience in bonded work. This dramatically increases the chances of bonding continuity and deal success.

✅ Strategic Deal Structuring

Our team understands how to structure deals that won’t spook sureties. Whether it’s retaining key leadership post-sale, pre-qualifying buyers with bond underwriters, or introducing co-investors with construction experience, we know how to thread the needle.

✅ Exit Planning to Preserve Bonding

Golden Shield works with contractor business owners well before they go to market to:

• Analyze how a sale could affect bonding

• Create transition plans that satisfy bonding underwriters

• Identify ways to protect and preserve bonding capacity during and after a sale

✅ Specialized Due Diligence

We guide sellers through due diligence processes with bonding in mind, highlighting financial strength, backlog quality, project history, and systems that instill confidence in risk-averse buyers and sureties alike.

The Bottom Line

If you’re a contractor business owner considering a sale, especially to a private equity group, bonding is a critical piece of the puzzle. Too often, sellers only discover the problem when a deal is already in motion and begins to fall apart.

Golden Shield Business Brokers specializes in overcoming these obstacles. We know how to tell your story in a way that buyers and bonding companies can understand, and more importantly, we know how to get deals done.

Ready to explore your exit strategy? Let’s build a plan that works, with your bonding and your legacy in mind.