- Before close, know who holds the client relationships, who can lead at the planned scale, and who is likely to leave.
- In construction, revenue often belongs to people. Key person concentration is as real a risk as customer concentration.
- Done early, talent diligence shapes the deal structure and lets necessary searches start on day one instead of month nine.
Before closing on a construction company, buyers should know three things about its people: who actually holds the client relationships, which leaders can operate at the scale the investment thesis requires, and who is likely to leave after the deal.
Financial diligence tells you what the business earned. Talent diligence tells you whether it can keep earning it under new ownership.
01 · Unplanned turnoverThe Cost of Skipping This Step
The cost shows up later. In an AlixPartners and Vardis study of private equity investors and portfolio executives, CEO turnover was unplanned in 34% of investments, which the study linked to worse returns and longer hold periods (AlixPartners via EACCNY).
Much of that turnover is predictable with a disciplined look at leadership before close.
02 · Revenue sits with peopleWhy Construction Needs Its Own Diligence Approach
In many industries, revenue sits with the brand, the product or long term contracts. In construction, much of it sits with people. Owners award negotiated work to builders they trust, and that trust often belongs to specific individuals. When a respected project executive or superintendent leaves, clients sometimes follow.
Construction companies also tend to have flat leadership structures. A $150 million contractor may have only four or five people who truly run the business. Losing one of them affects a large share of revenue.
03 · What to answer before closeThe Five Questions Talent Diligence Should Answer
Q1Where does revenue come from, by person?
Map the top 15 to 20 clients over the last three to five years. For each one, identify who owns the relationship. If most trace back to the founder or one executive, that is concentration risk, just as real as customer concentration.
Q2Can the current leaders operate at the planned scale?
A leader who runs a $100 million operation well may struggle at $300 million across three states. Evaluate each leader against the value creation plan, not the company's history.
One metro, one state, a founder who knows every job.
Three states, regional leaders, sponsor reporting and add-ons.
Q3Who is likely to leave?
Look at who is receiving proceeds from the transaction, who is not, and who may feel passed over. Senior people who receive nothing from the sale and see no new upside are frequent early departures.
Q4How deep is the bench?
For each critical seat, ask who could step in within 90 days. In many founder led contractors, the honest answer is nobody.
Q5What will the next leaders cost?
If you plan to add a CFO, a regional leader or a business development executive, include realistic compensation and search timelines in the model now.
04 · Sources of evidenceHow to Gather the Information
No single method answers all five questions. Used together, these give a buyer a reliable picture of the team.
Structured leadership interviews
Consistent, documented conversations with each senior leader focused on their scope, results and views of the business.
Organization and compensation review
Compare roles, titles and pay against the market to identify retention risk and gaps.
Project level performance data
Review margin performance by project manager and superintendent. It is one of the most objective indicators of leadership quality in construction.
Turnover history
High turnover under a particular leader is a warning sign that interviews will not reveal.
Discreet external market checks
Where appropriate and permitted, a specialist can gauge a leader's reputation with subcontractors, clients and peers.
05 · From diligence to deal termsTurning Findings into Action Before Close
06 · ClosingWhat This Means for Your Firm
Talent diligence does not need to be large or expensive. It needs to be specific to construction and done early enough to influence the deal structure.
Sponsors who understand the leadership team before close can price risk accurately, protect the relationships they are buying and start necessary searches on day one instead of month nine.
Vitality Group supports private equity buyers with confidential leadership assessment and executive search across construction and real estate. If you are evaluating a construction acquisition, we are glad to talk through the leadership team before you close.
- AlixPartners and Vardis study of private equity investors and portfolio executives, via EACCNY
About the author
Shawn Desgrosellier is Founder, President and CEO of Vitality Group, an executive search firm specializing in construction and real estate, and founder of Vitality Talent Acquisition, which helps employers improve talent acquisition performance.
FAQCommon Questions
What is talent due diligence in a construction acquisition?
A structured look at the people who run the business before close: who holds the client relationships, which leaders can operate at the scale the investment thesis requires, who is likely to leave after the deal, how deep the bench is, and what the next leaders will cost.
Why does construction need its own talent diligence approach?
In construction, much of the revenue sits with people rather than a brand or long term contracts. Owners award negotiated work to builders they trust, and that trust often belongs to specific individuals. Leadership is also flat: a $150 million contractor may have only four or five people who truly run the business.
How do you identify flight risk before closing on a contractor?
Look at who is receiving proceeds from the transaction, who is not, and who may feel passed over. Senior people who receive nothing from the sale and see no new upside are frequent early departures. Retention bonuses or equity participation can address the risk before close.
Does talent due diligence have to be large or expensive?
No. It needs to be specific to construction and done early enough to influence the deal structure, so sponsors can price risk accurately, protect the relationships they are buying and start necessary searches on day one instead of month nine.