top of page
Search

When Does a Real Estate or Construction Business Need a Fractional CFO?

Writer: Douglas Kohn, CPA
Douglas Kohn, CPA
6 days ago
5 min read

By Douglas Kohn, MBA, CPA


On October 13, Nasdaq-listed Cardinal Infrastructure Group agreed to buy Hughes Brothers Construction, a Central Florida heavy civil and site development contractor, for $357.5 million. The sellers can earn up to another $97.5 million based on Hughes Brothers' 2026 adjusted EBITDA, and Cardinal says it plans to use the business as a platform for more Florida acquisitions.


Consolidators are buying Florida contractors, and they look hard at the books before they pay. So do banks, sureties and equity partners. For real estate developers, contractors and South Florida owners, the right time to bring in a fractional CFO usually isn't tied to revenue size. It comes when one of these five warning signs shows up.




Construction crew at the Norris Dam site, Tennessee, November 1933. Photo by Lewis Hine for the Tennessee Valley Authority. U.S. National Archives (NARA 532788), public domain, via Wikimedia Commons.


1. Your bank or surety starts asking for more


The request might be reviewed financial statements instead of a tax return. It might be a quarterly covenant compliance certificate, or a 13-week cash forecast before a line renewal or a bonding increase.


Typical examples: a lender tests debt service coverage on a rental portfolio and gets a different number than you do. A surety asks why working capital fell between year-end and midyear. A construction lender wants a sources-and-uses schedule tied to every draw.


What a CFO or controller does: builds a covenant calculation that matches the loan agreement's definitions line by line, tests it monthly rather than at year-end, and prepares a rolling cash forecast that combines collections, retainage, payroll, debt service and capital calls. When a covenant gets tight, the conversation with the lender happens early, with numbers in hand.


2. Your entities no longer tie out


Developers often hold each project in its own LLC next to a management company. Contractors often keep equipment in a separate entity that rents it to the operating company. That's normal. The trouble starts when due-to and due-from balances don't match, management fees are booked on one side only, or equipment rent hasn't been charged in months.


There's also a reporting question. Under ASC 810, a related equipment or real estate entity can be a variable interest entity that the operating company would have to consolidate. Private companies can elect an alternative under ASC 810-10-15-17AD, added by ASU 2018-17, to skip the VIE analysis for qualifying entities under common control. The election applies to all qualifying entities and requires specific disclosures. Deloitte's consolidation roadmap walks through the criteria.


What a CFO or controller does: maps every entity and intercompany flow, reconciles intercompany balances monthly so both sides agree to the dollar, puts written leases and management agreements in place at defensible rates, and documents the consolidation policy so lenders and auditors see one consistent answer.


3. Someone asks for adjusted EBITDA and you can't defend it


In the Cardinal deal, up to $97.5 million depends on one metric over one year. Earnouts are an extreme example, but the same question comes from equity partners, buyers and lenders: what does this business really earn?


Typical examples: owner compensation well above or below market, personal expenses running through the company, one-time storm or legal costs, and related-party rent that doesn't reflect market rates. Each of those distorts EBITDA, and a buyer's quality of earnings team will normalize them whether you do or not.


What a CFO or controller does: builds a monthly bridge from GAAP net income to adjusted EBITDA in which every add-back ties to a GL account and a supporting document. Adjustments that won't survive diligence come out before anyone asks.


4. The owner is still closing the books at night


If you're reconciling bank accounts on Sunday, or the month takes 30 days or more to close, you're making decisions on old numbers. By the time you see a margin problem on a job or a property, it's two months old.


Typical examples: vendor bills sitting in email instead of being accrued, retainage receivable and payable never reconciled, job cost or property reports that don't tie to the general ledger, and a year-end that depends on the outside CPA to find errors.


What a CFO or controller does: sets a close calendar with a 10 to 15 business day target, assigns reconciliations and review steps, accrues payroll and material invoices, and delivers a short monthly package with financial statements, job or property results, cash, and key variances. The owner reviews it instead of building it.


5. Cash is tight even though the jobs or properties look profitable


This one surprises owners the most. The P&L shows a profit, but the bank balance keeps falling.


Typical examples: retainage held for months on completed work, slow collections from a large customer, equity going into a new project before the construction loan funds, interest reserves running down, or principal payments and capital improvements that never show on the income statement.


What a CFO or controller does: reconciles net income to cash flow every month so the gap is visible, tracks receivables and retainage aging by customer, schedules debt service and capital spending against expected inflows, and sets a minimum cash target that triggers action before an emergency.


Fractional CFO, full-time CFO, controller or bookkeeper?


A bookkeeper records transactions. A controller owns the close, reconciliations and reporting accuracy. A CFO uses those numbers for lenders, investors, capital structure and strategy. Many growing real estate and construction companies need controller and CFO judgment without a $250,000-plus full-time hire. A fractional arrangement gives you that experience for the hours you actually need, and it can scale up around a refinancing, a raise or a sale.


Tax planning context


Several of these warning signs carry tax considerations. Entity structure affects how income flows to owners, how the price in a sale gets allocated between equipment, goodwill and other assets affects the after-tax result, and earnout or stock consideration raises questions about timing. Bring your tax advisor in early, and keep the books in shape to support whatever structure makes sense.


The bottom line


You don't need a fractional CFO because you reached a certain revenue size. You need one when the people funding, bonding or buying your business start asking questions your current finance function can't answer quickly.


At Ultramar Financial, this is the controller and fractional CFO work we do every day for real estate developers, contractors and property owners. Our sister firm, SoFla Prime Consulting, does the same for local South Florida businesses and nonprofits. If any of these five signs sounds familiar, let's talk.


Sources


Cardinal Infrastructure Group, "Cardinal Infrastructure Group (CDNL) Announces Acquisition of Hughes Brothers Construction, Inc.," PR Newswire, Oct. 13, 2026: https://www.prnewswire.com/news-releases/cardinal-infrastructure-group-cdnl-announces-acquisition-of-hughes-brothers-construction-inc-302906370.html


Deloitte, Roadmap: Consolidation, Section 3.5 "Private-Company Alternative" (ASC 810-10-15-17AD, ASU 2018-17): https://dart.deloitte.com/USDART/home/codification/broad-transactions/asc810-10/roadmap-consolidation/chapter-3-scope/3-5-private-company-alternative


 
 
 

Comments

Copyright © 2026 Ultramar Financial. All Rights Reserved.

bottom of page