Common seller tricks in electrical
A common pitch is ‘service company’ when a large share of revenue is bid construction that will not follow you.
- The seller is the only master or qualifying electrician, described as if the license lives on the company.
- New-construction or solar subcontract revenue presented as recurring service.
- Helpers or apprentices counted as if they can work unsupervised after the journeymen leave.
- A fat backlog that is really soft quotes, not signed contracts.
- Unused material sitting on the books as if it still has full value.
Which numbers to verify
Split service calls, service contracts, and project work. Look at bid-to-win rates and whether recent jobs finished on budget. Reconcile deposits. Watch for one general contractor or a single solar or data-center program that is most of the volume. Recast the owner’s field hours and estimating time.
Licensing and key-person risk
Contractor licenses typically require a qualifying individual. If that person is the seller, confirm with the state board what happens at a change of ownership. Permit history should match the work claimed. Insurance and workers’ comp modifiers can move after a sale and should be priced into the deal, not ignored.
Equipment and condition
Lifts, benders, testers, and well-built vans are the productive assets. Ask about calibration on testers, age of lifts, and whether specialty tools are rented. Inventory of pipe, wire, and panels should be counted and marked to market, not listed at purchase price if copper has moved.
Seasonality and the calendar
Service is steadier than construction, but even service slows around holidays. Construction-heavy shops follow starts and inspections, not the calendar of a service van. Monthly figures will tell you which business you are actually buying.
Customer concentration
GC relationships are often personal. If two contractors are half of revenue, assume you are bidding those jobs from scratch unless there is a continuing-services agreement. Commercial maintenance accounts transfer better when the customer already knows more than one tech.
Questions to ask before you make an offer
- Who is the qualifying electrician of record, and what does the state require at a change of ownership?
- Please split revenue between service and project work for three years, with deposits to match.
- Which general contractors or programs are more than 10% of revenue, and is any of that work under a continuing contract?
- What signed backlog exists, versus quotes that have not been awarded?
- May I review job-cost history on the larger projects, including overruns?
- How many licensed journeymen will stay, and what are they paid?
- Can I see the permit history and any open inspection issues?
- How is material inventory counted, and will it be included at close?
- Are there unpaid retainages or unfinished punch lists I would inherit?
- After an LOI, may I speak with your accountant and a lead journeyman?