Looking at a 40+ year old electrical contracting business (I only have a one pager right now) with $3.8m in sales and $515k SDE (13% margins), asking price $1.7m (3.3x SDE).
Customer base of builders and homeowners, no concentration, and primary activities are residential wiring, home theater, smart home systems, LED light installs and recently added solar installation for commercial and residential.
Owner has been transitioning out for a few years and there is a management team of 5 key staff in place including a GM, project estimators and job supervisors, who would stay with the new owner.
I previously had not been considering the trades in my search, but thinking of speaking to the owner.
Curious if anyone has gone deep in a business like this and/or has any key questions that you'd ask in the first meeting? Do you think a trades business buyer need to be skilled in the trade? Opportunities for recurring revenue? Any insights appreciated!
Electrical Contracting Business
by a searcher
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1) What are the contractor licensing requirements in the states/areas the company does business in? Who in the company holds such licenses, & how likely is it those employees will stay. You might be able to obtain one yourself, but that will depend on your background & the requirements in your state.
2) Who does most of the estimating for the jobs? Similarly, how likely are those employees to stay? For the business I looked at, this item was the deal-killer as the owner was essentially a master Electrician who did 75% (or more) of the job estimating, which I could not feasibly replace for a decent cost.
Best of luck in your search!