Across construction, trades and the built environment, thousands of small and mid-sized businesses are approaching a generational crossroads.
- In Australia, over 46% of small business owners are over 50, and 22% are over 60. Construction is the largest industry by small business count, representing 18% of all SMEs.
Source: ASBFEO, CPA Australia - In New Zealand, half of all business owners are over 55. Many construction firms remain founder-led, with limited internal succession planning or governance.
Source: NZ Ministry of Business, Innovation and Employment - In Canada, the Canadian Federation of Independent Business (CFIB) reports that 76% of business ownersplan to exit within 10 years — yet fewer than 10% have a formal succession plan.
Construction and trades face additional succession challenges:
- Owner-operators often carry customer relationships, certifications and project sign-offs.
- Key staff may lack the personal capital to fund a buyout.
- Many founders are reluctant to sell to competitors or private equity — fearing job losses or cultural erosion.
Yet these same businesses hold powerful succession potential. And that’s where employee-led buyouts (ELBOs) come in.
Why Construction and Trades Are Uniquely Suited to ELBOs
Founders in the built environment are often hands-on, legacy-focused and deeply embedded in their communities. That makes employee-led succession — via MBOs, ELBOs, or employee trusts — a strategic and cultural fit.
1. Loyal Teams with Operational Knowledge
Site supervisors, estimators, forepersons and administrators already run the daily operations. ELBOs reward that loyalty and unlock ownership for the people driving performance.
2. High Stake in Continuity
Clients rely on reputation, reliability and relationships. Internal buyouts minimise disruption and maintain project pipelines.
3. Asset-Backed Financing Potential
Construction firms often own equipment, contracts or recurring clients that support vendor finance, bank lending, or hybrid trust structures — enabling buyouts without personal wealth from employees.
4. Retention Through Ownership
In a tight labour market, offering ownership helps retain high performers, attract new talent, and embed a long-term mindset.
What is an ELBO?
An Employee-Led Buyout (ELBO) is a structured transition where ownership is sold to employees — either key managers or a broader team — through financing tools such as:
- Vendor finance (payments made over time from company profits)
- Employee Share Schemes (ESS) in Australia and NZ
- Employee Share Ownership Plans (ESOPs) or Employee Ownership Trusts (EOTs) in Canada
- Hybrid structures combining employee ownership with aligned external capital
These deals are not about employees “buying the business out of pocket.” They are about using the business’s own performance and structured financing to create sustainable ownership.
What’s Happening in Each Market?
Australia: High Interest, Limited Structures
- Construction is the largest SME sector in the country.
- While no formal EOT regime exists yet, Employee Share Schemes (ESS) can be used to transfer equity gradually — with recent tax concessions improving usability.
- Hybrid ELBOs using discretionary trusts and vendor finance are increasingly used in succession-focused SMEs.
Case Insight: A regional consulting firm in Victoria transitioned 60% ownership to senior employees using a vendor-financed trust model. The founder retained a board chair role. Revenue increased and staff engagement improved post-deal.
New Zealand: Strong Culture, Few Tools
- No formal ESOP/EOT frameworks exist, but trusts and share schemes can be tailored to suit employee transitions.
- Founder-led construction firms are widespread, yet succession planning remains low.
- Māori-owned businesses are innovating with community-based stewardship models.
Practical Note: Most New Zealand ELBOs are privately structured using vendor finance and discretionary trusts. Coaching and governance support are critical for long-term success.
Canada: New EOT Regime Creates Momentum
- In 2024, Canada introduced the Employee Ownership Trust (EOT) — allowing founders to sell to a trust tax-free up to $10 million, subject to conditions.
- ESOPs are already used across construction, manufacturing and logistics — with support from BDC, ESOP Builders and growing public awareness.
- Canada’s Lifetime Capital Gains Exemption (LCGE) continues to support broader succession strategies for qualifying businesses.
Case Insight: A 45-person construction support firm in Ontario transitioned ownership through a vendor-financed ESOP. Staff turnover dropped by 40%, and the founder retained a 20% stake while mentoring the next generation of owner-leaders.
Five Steps to Explore an ELBO in Construction or Trades
If you’re a founder in the built environment — here’s where to start:
1. Assess Team Capability
Do you have one or more team members who could lead with support? Are they aligned on values and vision?
2. Explore Structure Options
From direct share schemes to trust-based models, explore what’s feasible in your region — with a focus on simplicity, affordability and alignment.
3. Use Vendor Finance as a Foundation
Most ELBOs rely on vendor finance to bridge the capital gap — allowing you to be paid over time while giving the business room to grow.
4. Engage Experienced Advisors
Legal, tax and transaction structuring is critical — especially when combining trusts, lending and staged exits.
5. Plan for the Post-Deal Phase
Succession doesn’t end at signing. It succeeds through coaching, 100-day planning, and KPI monitoring — ensuring the business thrives without you at the centre.
Why Blue Harbour Capital?
At Blue Harbour Capital, we help founders in construction and trades design and deliver succession plans that protect:
- Your financial return
- Your people and culture
- Your project delivery and client relationships
- Your long-term legacyWe blend deal execution with post-deal coaching, helping your next generation step confidently into leadership — and ownership.
Let’s Talk Succession
Whether you’re running a plumbing business in Victoria, a civil engineering firm in Christchurch, or a commercial GC in Ontario — the next chapter is coming.
You can wait and risk a fire sale.
Or you can design a transition that protects what you’ve built — and empowers the team that helped build it.
Reach out for a confidential strategy session.