Selling your electrical contracting business to private equity

Where private equity stands in electrical (2026)

Electrical contractors are being bought into the same roll-up wave that reshaped HVAC, most often as add-ons to multi-trade platforms rather than as standalone electrical platforms. A private equity firm builds a platform, frequently HVAC-led, and adds plumbing and electrical companies so it can offer a homeowner more than one trade under one brand. Electrical is a natural add-on because a service platform that already visits the home can sell panel upgrades, wiring, and service calls to the same customer base.

For an owner, this means your likely buyer is a professional acquirer running a broader platform, not an electrical-only firm, and the demand is real. But it also means the person across the table has done many deals while you are probably doing your first and only one. The rest of this page is about closing that gap: what drives your price, how the deal is put together, what you keep after tax, and what your working life looks like afterward.

What is my electrical contracting business worth?

Value starts from EBITDA, your earnings before interest, taxes, depreciation, and amortization, adjusted for owner pay and one-time costs. The buyer applies a multiple. In 2026, reported ranges are roughly 3.2 to 5.0 times EBITDA for a smaller company bought as an add-on, and roughly 6.5 to 8.0 times for a larger company bought as a platform. These are ranges other sellers have reported, not an offer to you. For electrical work, one factor moves the number more than any other: your mix of service versus project work.

Residential service beats project and new-construction work for the multiple. Recurring service and repair is steady, higher margin, and continues after the sale, while project and new-construction revenue is lumpy, tied to the building cycle, and harder to transfer. Two electrical businesses with identical EBITDA can land in different bands if one lives on recurring service and the other on big projects. The other levers are the familiar ones.

• Recurring service agreements and membership plans that produce predictable revenue.
• A residential service mix over project and new-construction work, which is the point most specific to electrical.
• Fleet condition and electrician retention, because licensed electricians who stay are harder to replace than trucks.
• Clean books, meaning reviewed financials, clear job costing, and separated personal expenses.

The valuation page covers EBITDA add-backs and the working capital peg, and the calculator turns a headline multiple into an after-tax number.

How the deal is usually structured

The headline price is enterprise value, not your check. A typical electrical deal pays around 60 to 70 percent in cash at close. A rollover stake, usually near 20 percent though it can range wider, is taken as equity in the buyer's holding company rather than cash. Another 5 to 10 percent is held in escrow for a year or more against problems found after closing. A working capital peg sits alongside, requiring you to leave a set level of receivables and other working capital in the business, which can reduce the final number if you run lean, and which matters more when your revenue is project-based and your receivables swing.

On deals above roughly $10 million of enterprise value, representations and warranties insurance is common, shifting some risk from you to an insurer. Earnouts, where part of the price depends on hitting future targets, are common in agency deals but rare in the trades, so most electrical sellers do not carry one, though a project-heavy business is more likely to see a holdback tied to work in progress. The deal terms glossary defines each term, and rollover equity covers the piece that stays at risk.

How you will be taxed

Most of your price is goodwill, taxed as long-term capital gain at 20 percent federal plus your state's rate. The part owners underestimate is depreciation recapture. If you wrote off trucks, tools, and equipment using bonus depreciation or Section 179, the gain on those assets up to the amount you deducted is taxed as ordinary income under Section 1245, at up to 37 percent, and it is recognized in the year of sale. An electrical contractor carries a fleet and a lot of equipment, so this ordinary-income slice is larger than it is for most sellers, and it deserves attention before you sign rather than after.

A covenant not to compete is also ordinary income to you, and consulting or transition pay is ordinary income plus payroll tax. The split between capital gain and ordinary income is set by the purchase price allocation in the contract, and the buyer is often indifferent to it while it costs you real money. The full mechanics, including the allocation form and the rollover's deferred tax, are on the how a sale is taxed page.

QSBS deserves an honest word. Section 1202 can exclude a large amount of federal gain, but only if your company was a C corporation when the stock was issued and for long enough after. The trades are not on the list of excluded fields, so an electrical company generally can qualify if it is a C corporation. But most electrical contractors are S corporations or LLCs, and those hold no QSBS at all. The real question for most sellers is whether a C-corp conversion happened years before the sale. It is fact-specific and needs a written CPA opinion, so do not assume it applies. The QSBS page walks through the two gates.

What changes after you sell

After closing, you hold a cash check and you no longer own your company. Most platforms want you to keep running the business for two to three years, but as an employee inside their system. Pricing, purchasing, software, hiring rules, and back office usually move to the platform's way of doing things. For an owner used to running every job and every bid, that loss of control is often harder than the change in money, and it is the part sellers most often underestimate.

Your income changes too. The salary and distributions the business paid you stop, replaced by a platform salary that is usually smaller, and by whatever the rollover pays someday. The rollover is a minority stake in a private, leveraged company you no longer control, and it may be worth more at the next sale or nothing at all. Plan your household around the cash you kept and treat any rollover payout as a bonus. The after-sale plan and managing rollover equity pages cover the money side.

Who should not sell right now

Selling to a platform is not right for every owner, and an offer can make the choice feel already decided.

• If your revenue is mostly project and new-construction work, you may get a stronger price after building recurring residential service, because that shift is exactly what lifts the multiple for electrical.
• If the business still runs through you, and no one else can estimate, schedule, and manage the crews, a couple of years spent building that bench can raise your multiple more than the offer in front of you is worth.
• If you cannot picture yourself taking direction inside someone else's system for two to three years, the cash may not be worth the working conditions, and a slower sale to a family member or key employee may fit you better.
• If you would owe heavy depreciation recapture and have no plan for the tax, closing before you understand the ordinary-income slice can cost you more than the preparation would.

What to do next

1. Shift the mix, then clean the numbers

   If you can grow recurring residential service before you go to market, that single change can move you into a stronger band. Alongside it, get reviewed financials, clear job costing, and personal expenses separated, before any buyer conversation.

2. Model the after-tax number

   Run your expected multiple through the calculator, and look closely at the depreciation recapture on your fleet and equipment, because that ordinary-income piece is larger for electrical than most sellers expect.

3. Check the two QSBS gates early

   Ask your CPA whether the company is or ever was a C corporation, and get the answer in writing. If it always was an S corporation or LLC, set QSBS aside and focus on the allocation, the structure, and the after-sale plan. See QSBS.

4. Plan the money before the check lands

   Decide how the cash will replace your income and how you will treat the rollover, using the after-sale plan. When you want a second opinion, the contact page explains how a first conversation works, including when we will tell you that you do not need us.