Electrical Contracting Business

searcher profile

October 12, 2020

by a searcher from Columbia University - Columbia Business School in Princeton, NJ, USA

Hi all, I have identified a target in the electrical contracting business ($6M revenue) and in preliminary discussion, moving to an LOI. Would be great to connect with anyone who knows this space as operators. Does the license reside with the business or individual? I am a self funded searcher but interested in interest equity partners or bank lending. Thanks.

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commentor profile
Reply by a searcher
from Texas A&M University in San Antonio, TX, USA
I looked at several electrical contractors early in my search. In most states the business is required to operate under the license of an individual Master Electrician. Typically this individual is the owner, but it could also be a key employee. If the license holder isn’t the owner you will have to pay that person very well because their license (and livelihood) is on the line if there is ever an issue. I also found it very difficult to secure debt financing for smaller licensed contractor businesses. SBA is normally not an option unless you happen to already hold the relevant license. If it’s a larger target ($2m+ EBITDA) with multiple license holders as foremen this may be less of an issue.
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Reply by a searcher
from Harvard University in Portland, OR, USA
Anonymous - a lot of this will depend on what state/city/local regulations dictate. There is another thread that speaks a bit about these regulations which might be helpful:

https://www.searchfunder.com/post/contractors-licenses-for-service-business-without-requisite-experience
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