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Selling an electrical contracting company in Texas
Service work, the master electrician of record and the backlog decide what an electrical contractor sells for.
Electrical contractors are being bought for two reasons. Home services groups want electrical alongside HVAC and plumbing, and commercial buyers want licensed electricians at a time when there are not enough of them.
What a buyer pays depends on the kind of work. Service, maintenance and repeat commercial customers are valued higher than bid construction work, where every job has to be won again and the margin is decided on bid day.
Electrical contractors, at a glance
- Transactions we have published1
- Most recent closingOctober 2019
- Companies we sell$3M–$100M
- Typical sale3–9 months
- Fee if we do not closeNone
What decides the price
What buyers examine in an electrical contracting company
| Factor | What a buyer does with it |
|---|---|
| Service against bid work | Repeat service and maintenance customers earn steadier margins than competitively bid projects. Show the revenue and the margin for each. |
| Backlog and work in progress | Signed work not yet completed is evidence of next year's earnings. A buyer also checks that jobs in progress are billed and costed accurately. |
| The master electrician of record | A Texas electrical contractor license is issued by TDLR and depends on a master electrician assigned to the company. If that is you, a successor has to be in place before closing. |
| Licensed electricians | Journeymen and masters with tenure are scarce, and are a large part of what is being bought. |
| Customer concentration | If one general contractor or one facility provides a large share of revenue, buyers price the risk of losing it. |
| Estimating without the owner | If every bid goes through you, the buyer is buying your judgment. An estimator and project managers who run jobs on their own raise the price. |
Proof
Electrical contractors we have sold
Published because their owners agreed to it, with the month each one closed.
Who buys
The three kinds of buyer for an electrical contracting company
Home services platforms
Groups adding electrical to HVAC and plumbing to serve the same residential customers.
Commercial and industrial contractors
Larger electrical contractors buying licensed people, customers and a region.
Individual buyers
Often a master electrician or an experienced operator using SBA financing.
Before you go to market
Four things that raise the price, and cost nothing
If a sale is a year or more away, this is the work that pays. It is also the first thing a buyer's accountant will ask for. Pre-exit consulting is how we help owners do it.
- Separate service and maintenance revenue from bid project revenue.
- Bring job costing and work-in-progress schedules up to date.
- Identify who can be the master electrician of record after you.
- List licensed electricians with tenure and license level.
Questions about selling an electrical contracting company
What is an electrical contractor in Texas worth?
It follows adjusted earnings, and the quality of those earnings. For companies with $3 million to $100 million in revenue, offers most often fall between three and seven times adjusted EBITDA. A company with repeat service customers and a team that runs jobs without the owner sits higher in that range than one that depends on winning bids. A confidential opinion of value is free.
Does backlog raise the price?
It supports it. Signed work gives a buyer confidence that next year's earnings are real, which keeps an offer from being discounted. It matters most when the margin on that work is documented job by job.
Will my employees or customers find out?
Not from us. Your company goes to market as a blind profile, with no name and nothing that identifies it. A buyer signs a confidentiality agreement and proves they can fund the purchase before they learn who you are.
How long does a sale take?
Typically three to nine months from engagement to funds wired. How profitable the business is, how well the records hold up and how many buyers are at the table decide where you land.
Your company
Talk to an advisor about your electrical contracting company
Four fields and a reply the same business day. Nothing you send is shared with anyone. If you would rather talk, call (855) 637-2776.
- A value range and what is driving it
- What a buyer would examine first in your company
- No fee unless and until your company sells