For businesses valued from $5M to $100M+
Considering selling your electrical business?
Electrical contractors are valued very differently depending on whether the work is project-based or service-based. Buyers underwrite the quality of your backlog far more carefully than the size of it.
- Service versus project mix
- Backlog quality
- Work in progress accuracy
- Bonding capacity
- Change order discipline
- Journeyman retention
- Prevailing wage exposure
- General contractor concentration
- Adjusted EBITDA add-backs
What electrical buyers are actually underwriting
The first question a buyer asks about an electrical contractor is how much of the revenue is service and how much is project work, because the two are valued on different bases.
Beyond that, almost everything comes down to whether jobs finish where they were bid. A backlog is only worth what it earns at completion, and buyers will test that against three years of history before they price it.
Work in progress is where most electrical deals get repriced. A schedule that cannot be defended line by line is the fastest way to lose value between a letter of intent and a closing.
What gets examined closely
- Split across service, tenant improvement and ground-up project work
- Backlog composition and gross margin by job type
- Work in progress accuracy, and history of over and under billing
- Bonding capacity and the strength of the surety relationship
- Change order discipline, approval process and collection history
- Journeyman and apprentice headcount, tenure and licensing by state
- Union status and prevailing wage exposure, and what integration would require
- Customer and general contractor concentration
Who buys electrical contractors
Private equity platforms and their add-ons
Platforms in the electrical and specialty trades are active, with particular appetite for service revenue and for exposure to data centers, healthcare and industrial end markets. They are more cautious about pure project businesses, and will structure around project risk when they see it.
Strategic acquirers
Larger contractors and diversified building services companies buying license coverage, geography or crews. A strategic with overlapping customers can often justify a higher number, and typically wants the owner out on a shorter timeline.
Which type of buyer suits you depends less on the multiple than on what you want afterward: a clean exit, a second bite through rollover equity, or a few more years running the business with someone else's balance sheet behind it. That is worth deciding before you go to market rather than during.
- A work in progress schedule that cannot be defendedNothing erodes a purchase price faster than a restated WIP in the middle of diligence
- Backlog treated as though it were earningsBuyers underwrite margin at completion, not contract value at signing
- Concentration with a single general contractorOne relationship carrying the backlog usually means a large escrow, an earnout, or both
Where electrical owners lose value
Almost always in the same three places, listed alongside. None of them are inevitable, and all three are decided well before a letter of intent is signed.
Getting the WIP schedule reviewed by someone independent before you go to market costs very little and protects a great deal.
Request a confidential valuation.
An advisor who works with contractors will review your business and give you a real range, along with what would move it.
- No cost, no obligation, strictly confidential
- Grounded in what buyers in your sector are paying now
- Useful whether you sell next year or in five