When private equity firms evaluate founder-led businesses, they look to see if the founder has built enough depth around themselves for the business to scale beyond what any one person can achieve. Here’s how to do that.
This should be a golden age for firms in the architecture, engineering and construction sector.
By one forecast, the US market for data centre construction alone is set to more than double from around $94bn in 2025 to $211bn in 2033.
There’s a lot of work around, but many firms riding the wave are not more durable than before. Even though their backlogs are growing and revenue is up, their operating models have not kept up.
Most small and medium businesses in the sector still work under a founder-centric model. It’s both a vulnerability and a barrier for potential investors and partners looking for opportunities to scale.
Over the next decade, success will not be defined by who wins the most work.
It’ll be defined by the firms who nurture great human talent and support them with AI-enabled systems that can scale, preserve institutional knowledge and perform beyond a single individual.
As little firms grow, so does the leadership gap
Many founders build impressive businesses from little more than grit, relationships and execution discipline.
If the company’s safety culture only works when the owner is present, the company is not truly built to scale.
But the same founder-led intensity that helps a company grow can later become a structural weakness when decisions, customer trust, and day-to-day execution depend on one person.
Clearly, founders are the reason the business exists and the reason investors are interested in the first place.
But when the founder has been stretched across every function for years, the people around them often have titles that no longer match the capability the business needs to attract investment and grow.
A bookkeeper with a CFO title is not the same as a finance leader trained to manage lender relationships, build investor-grade reporting and translate field and engineering operations into terms investors can understand.
The person may be excellent at what they do, but now they need a different skill set.
The same principle applies to operations, HR, technology, sales and marketing, and safety.
If the company’s safety culture, for instance, only works when the owner is present, the company is not truly built to scale.
This is not a criticism of the people in those roles, it just means the business has outgrown the structure around the founder.
The challenge is to define where the founder’s personal involvement is still essential and where leadership depth, systems, processes and accountability must take over.
Where AI matters in construction today
AI’s most important contribution to construction is not in robots doing the tough jobs or whipping up engineering drawings.
Most of the innovation today is happening in the back office: financial operations, project controls, and reducing key-person risk with effective knowledge management.
These are functional areas where small breakdowns lead to major cash-flow problems.
That matters in boom times like now because companies don’t normally run out of work, they run out of cash.
A minor timesheet or billing coding error, a delayed billing cycle, or a poorly tracked change order can tie up millions in receivables.
In that environment, AI can help finance and operations teams move faster, identify risks earlier, and improve the quality of decision-making.
The 80/20 approach
In smaller construction firms, much critical knowledge is tacit, meaning it’s locked in the minds of a select number of people. That includes estimating methodologies, client preferences, safety protocols and equipment use patterns, to name a few.
When that knowledge is not captured, the organisation wobbles every time someone is unavailable or leaves the business.
This is where founders should apply an 80/20 approach. Not every process needs to be transformed overnight, so start with the 20% of operational knowledge that creates 80% of risk exposure.
Organisations that can show prospective partners or investors that their most critical workflows are documented, data-driven and transferable present a fundamentally different proposition than one that revolves around the founder’s instincts.
What investors will reward
AI can’t replace the vital human talent construction businesses need.
Skilled trades and core engineering that requires boots on the ground and human judgment are far less exposed to automation than desk-based work in other sectors.
So, smart founders build a culture that values people and does not treat them as interchangeable and expendable units of labour.
A-players want autonomy, accountability and real skin in the game. They want a leadership that invests in their growth.
Companies that pair AI-enabled operations with real investment in leadership create a resilient platform for growth.
Founders who treat building that team as a competitive advantage and move decisively when the right people are in front of them are often the ones whose companies trade at a premium.
The demand is there and the opportunity is momentous.
- Hari Vasudevan, PE, is Founder & CEO of KYRO AI. Neil Shah is President & CEO of the Construction Financial Management Association. Tony Hazen is Managing Partner of DHR Global.
