Before you close, verify the license, the technicians, and the revenue mix. Here is exactly what to check and why it matters.
Find Electrical Contracting Acquisition TargetsAcquiring an electrical contracting business requires scrutiny beyond standard financial review. License transferability, technician retention, and the split between recurring service work and one-time new construction projects are the three factors most likely to determine whether your acquisition succeeds or stalls post-close.
Confirm the business can legally operate under new ownership without interruption. License issues are the most common deal-killers in electrical contracting acquisitions.
Confirm whether the owner or a separate employee holds the master electrician license. If the owner holds it, identify a licensed replacement before closing or the business cannot legally operate.
State contractor licenses are rarely transferable. Verify your state's re-licensing requirements and timeline so operations are not interrupted between signing and post-close activation.
Request a full permit history from the seller and cross-check with local building departments. Unresolved permits or violations become your liability at closing and can trigger costly remediation.
Validate that reported earnings are real, recurring, and defensible. Recast EBITDA carefully and stress-test revenue for concentration and cyclicality risks.
Request three years of tax returns and P&Ls. Identify owner compensation, personal vehicle expenses, family payroll, and non-recurring items. Recasted EBITDA drives your valuation multiple at 3x–5.5x.
Separate maintenance contracts and service agreements from new construction revenue. Businesses with 40%+ recurring service revenue command higher multiples and carry less volatility risk.
Flag any single customer exceeding 20% of revenue. Commercial and new construction accounts are especially concentrated. Request contracts, renewal terms, and direct customer reference calls.
Evaluate the physical assets and human capital that actually deliver revenue. Technician departures and equipment failures are the fastest ways to erode value post-acquisition.
Audit every field employee's license level — apprentice, journeyman, or master. Assess who is at retirement risk or likely to leave with the seller, and build retention incentives into your deal structure.
Request a full vehicle and tool inventory with maintenance records and mileage. Aging trucks and outdated test equipment signal deferred capex that will hit your cash flow in year one post-close.
Pull five years of general liability and workers' comp claims history. A poor safety record inflates insurance premiums and signals operational risk that affects bonding capacity for commercial bids.
Verify the Electrical Contracting acquisition qualifies for SBA financing, the purchase price is supportable by the verified cash flow, and the deal structure protects the buyer's downside.
Confirm the Electrical Contracting meets SBA 7(a) eligibility requirements: the business is for-profit, U.S.-based, within SBA size standards, and the buyer meets personal financial requirements. Some industries have specific SBA restrictions — verify before LOI.
Model verified normalized EBITDA against projected SBA loan payments at current rates. A $1M SBA 7(a) loan at 10.5% over 10 years costs approximately $13,000/month. The Electrical Contracting must generate at least 1.25x debt service coverage after a market-rate manager salary to pass underwriting.
Confirm the seller note is properly subordinated to the SBA loan and goes on 24-month standby as required by SBA rules. If an earnout is included, define exact measurement metrics, time period, and dispute resolution process before signing the purchase agreement.
Before signing a Letter of Intent, request these documents from the seller. Missing or incomplete items are a red flag — not a reason to proceed without them.
You cannot legally operate without a licensed master electrician on staff. Either require the seller to hire and retain one before closing, or negotiate an extended transition period with the seller serving as the qualifying licensee.
Most electrical contractors in the $1M–$5M revenue range sell at 3x–5.5x recasted EBITDA. Businesses with recurring service revenue, diversified customers, and a non-owner master electrician license command multiples at the higher end of that range.
Yes. Electrical contracting is SBA-eligible. Most deals use an SBA 7(a) loan covering 80–90% of the purchase price, with the balance covered by a seller note. Strong EBITDA and clean financials are required for lender approval.
Technician departure is the most common value destroyer post-close. If key journeymen leave with the seller, revenue capacity drops immediately. Build retention bonuses and employment agreements into your deal structure before closing.
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