By Bill Anderson, FCCA, Chief Executive Officer, Assetica — 2026-07-08
Construction and contracting businesses are valued differently from most UAE companies: work-in-progress, retention receivables, the order book, plant and equipment, and project concentration all move the number. What UAE buyers, banks and courts look at, why contractors trade at 3x to 5x EBITDA, and how to defend your value.
Construction sits at the lower end of UAE multiples because margins are thin and exposed to material and labour costs, earnings are lumpy (a strong year on one large project, a weak year when the pipeline gaps), and cash conversion is poor because retentions of 5 to 10 percent are held for months or years and payment cycles are long. Barriers to entry are moderate, so a buyer pays mainly for the order book, relationships and equipment rather than a defensible moat. Position within the range depends on how much of the earnings a buyer can rely on repeating.
Work-in-progress is real value only if it will be certified and paid, so it is tested against contract terms and the client's payment history. Retention receivables are money earned but held back until defects-liability periods end, discounted for time and collection risk. Plant, machinery and equipment (cranes, formwork, vehicles) are valued separately on a depreciated replacement or market basis and support margins by reducing hire. The signed, funded order book is the strongest driver, converting speculative future earnings into visible ones: two years of secured backlog is worth materially more than living project-to-project.
Because any single year is distorted by project timing, a defensible valuation normalises earnings across a three to five year cycle and strips out one-off project gains or losses, above or below market related-party rents and salaries, owner remuneration, and any project too large to recur. The goal is the maintainable EBITDA a new owner could expect year after year at arm's length. Owner-run contractors lose value here: if profit depends on the owner personally winning tenders and running sites, buyers discount it because that earning power leaves with the seller.
Buyers focus on order-book quality, client concentration, the transferability of grades and pre-qualifications, and whether key project managers stay. Banks want a conservative, asset-backed view with retentions and WIP discounted. Courts and partners in a dispute want an independent number that normalises earnings so neither side can cherry-pick a good or bad year. In every case the winning documentation is the same: clean project-costing records, an aged and evidenced retention and receivables schedule, a signed order-book summary, and a fixed-asset register for the plant.
What multiple does a construction company sell for in the UAE?
Most contracting businesses trade at roughly 3x to 5x normalised EBITDA, cross-checked against net assets. Position within that range depends on the forward order book, client concentration, in-house equipment and how much earnings depend on the owner. Asset-rich contractors with secured backlog reach the top; project-to-project firms with one big client sit at the bottom.
How are retentions and work-in-progress treated in the valuation?
Both are real value but discounted for time and collection risk. Retentions are money earned and held back until defects-liability periods end, so the valuation assesses how much is genuinely recoverable and when. Work-in-progress is only counted to the extent it will be certified and paid under the contract. Clean, aged schedules for each let a valuer, buyer or bank give full credit.
Why is my contracting company worth less than last year's profit suggests?
Because a single year's profit reflects which projects happened to complete, not sustainable earning power. A defensible valuation normalises earnings across a three to five year cycle, removes one-off large projects and non-market owner costs, and prices the maintainable figure. If your best year was driven by one large contract that will not repeat, buyers price the underlying run-rate, not the peak.
Does my plant and equipment add to the valuation?
Yes. In-house cranes, formwork, vehicles and equipment are valued separately on a depreciated replacement or market basis and support the overall value, both as assets and because owning rather than hiring protects margins. A current fixed-asset register with condition and purchase details lets the equipment be credited properly rather than assumed.