The Ownership Clock is Running Out

Ownership transitions take years to execute, yet many E&C firms delay planning until timelines compress, risk escalates and options narrow.

Ownership transfers may be inevitable, but that doesn’t mean every engineering and construction (E&C) firm will be ready for the transition. Few realize just how early the clock starts, for example, and even fewer start preparing well enough in advance. The outcome? A mad scramble to formalize processes, pick successors and preserve firm value before the final deadline arrives.

These gaps show up in FMI’s data, which says most owners lack a formal ownership transfer plan even as many expect to step away within the next decade. The problem is that ownership transitions take time, capital and coordination across leadership readiness, governance, risk management and overall business strategy. When planning is delayed, these elements become harder to control and align.

Knowing that successful transitions rarely unfold on compressed timelines or follow predictable paths, E&C organizations that start early have more room to course-correct, protect the business and preserve what they’ve built, rather than being forced to react as the clock ticks down.

When Ownership Transitions Stall

Engineering and construction firms face growing pressure to plan for ownership transitions, yet many still delay action. Data from FMI and the Construction Financial Management Association show a widening gap between owners’ exit timelines and their readiness to execute a transition. The study highlights several clear risk indicators, including:

• 58% of E&C firm owners don’t have a formal ownership transfer plan in place.
• Among owners planning to exit in less than five years, 51% still don’t have a defined transition strategy.
• About 64% of respondents plan to transition ownership internally, a path that typically requires more time, deeper coordination and earlier alignment across leadership, financing and governance.

These numbers paint a clear picture: many owners underestimate how early they need to start and how much coordination ownership transitions actually require. The research also shows that ownership transitions rarely move quickly or follow predictable paths, and that these efforts require years of preparation and sustained coordination across leadership development and financial planning. Firms that wait limit their options and take on more risk while those that start early prevent rushed decisions and poor outcomes.

“Most firms don’t struggle because they dismiss ownership transition planning. They struggle because they don’t know where to begin,” says Matt Godwin, managing director at FMI Capital Advisors. “Every transition involves multiple stakeholders and competing priorities, from ownership and leadership readiness to estate planning, liquidity and future growth.”

That breadth can interfere with early decision-making. Ownership transitions rarely follow a straight line, and few firms have clear answers upfront about future roles, timing or structure. Without a defined starting point, long-term transition planning often gives way to day-to-day demands, says Godwin, “even as timelines shorten and risk grows.”

The Risks of Putting It Off

When firms put off ownership transition planning, the risks tend to stack up quickly. Timelines shrink, flexibility disappears and decisions get harder to unwind. The most common trouble spots include:

• Fewer viable options to choose from. Short timelines limit ownership structures and financing choices.
• More financial pressure. Late planning complicates liquidity, valuation and tax decisions.
• Leadership gaps. When thrown into new positions overnight, successors may not be ready to take over when ownership changes.
• Governance issues. Unclear authority and decision rights slow progress and create friction.
• Unplanned disruptions and exits. Without buy-sell agreements or contingency plans in place, unexpected events can disrupt the business.

Each of these risks is problematic, but poor timing is the broader issue that cuts across all of them. In fact, many of these issues don’t surface until firms have little room left to maneuver. This creates compressed timelines, limited options and rushed decisions. “Most firms underestimate just how much time they actually need,” Godwin says. “The reality is that it takes anywhere from 8-10 years to prepare for and enact a smooth ownership transition.”

With more than half of E&C firm leaders planning an exit in less than five years and lacking an ownership transfer plan, companies will enter the transition window already behind schedule. That disconnect leaves little margin for error once planning begins and limits sound decision-making around leadership, ownership structure and long-term continuity.

To close that disconnect, owners need to step back from daily operations, assess what the business requires from a transition and protect continuity along the way. This is important because leadership development, role clarity and ownership objectives rarely align on compressed timelines.

“Construction firms typically don’t have the profits to move ownership quickly without putting pressure on the business,” says Godwin. “The key is developing people and getting them into the right roles while transitioning ownership in a way that works financially.”

Get a Head Start Now

Most E&C firms don’t delay ownership transfer and succession planning out of neglect. They stall because they can’t clearly define what the transition needs to accomplish for the business. That lack of definition becomes a stopping point long before firms ever get to timelines, structures or successors. “The first step is defining what you’re trying to achieve,” Godwin says. “That can be personal or it can come from the business.”

Ownership transitions also depend on trust between buyers and sellers, leadership readiness and financial constraints that don’t fit a fixed document or rigid timeline. “It’s hard to put something on paper that says exactly how it’s all going to go,” Godwin says. “There has to be a foundation of the core transition principals with certain levers of flexibility. What matters is identifying the three or four priorities that are most important to the business.”

Starting early gives firms room to adjust as conditions change. Because construction companies operate in environments that shift over time, long-range predictions and forecasts can be difficult to pin down. “You may not be able to project what a construction business will look like five or 10 years out,” Godwin says, “but starting earlier gives you time to adjust to economic and business shifts.”

Getting that early start matters more than ever. Rapid expansion over the past several years has pushed valuations higher and made many E&C businesses more complex to operate and govern. Higher value and greater complexity raise the stakes for ownership transitions and narrow the margin for error.

“A lot of firms have grown significantly over the last five years, and that growth has driven company values up,” Godwin concludes. “As businesses scale and get more complex, transitions become harder to execute. The earlier you start, the more options you’ll have.”

Ownership transitions rarely fail because of a single bad decision. They fail because critical questions go unasked for too long. If you’ve been thinking about the next steps for your business, consider the following:

• What would define a successful transition for me? What is most important?
• How will key decisions be made once I step back?
• Which leaders will operate the business if I suddenly have to step away and how well prepared are they currently?

If these questions are difficult to answer, that’s often the first sign the transition window is already open, whether formal planning has begun. Taking time now to think strategically about ownership transition planning can preserve flexibility, protect continuity and give owners far more control over what comes next, long before the clock runs out.