35-Year Commercial Electrical Contractor, Billings Montana

$2.2M

Revenue

$577K

SDE

3.5x

Multiple

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Full Editorial Writeup

This is a 35-year-old electrical contractor based in Billings, Montana, generating roughly $2.2M in revenue and $577K in owner cash flow at a healthy 26% margin. The work mix skews 70% commercial, spanning design-build projects, lighting, backup power systems, transfer panels, conduit installation, and limited data wiring. The jobs run the gamut from quick service calls to complex commercial engagements, which gives the business a broad revenue base rather than a single project type dependency.

The business has built a durable regional reputation on quality workmanship and fair dealing, which translates into substantial repeat and referral business with minimal paid advertising. That is the quiet strength here: a contractor that does not have to buy its pipeline is worth more than one that lives and dies by lead spend. The team of eight covers estimating, administration, scheduling, and field work, including a licensed Journeyman and an apprentice, with the owner primarily overseeing estimates on larger commercial and design-build projects.

The owner is selling to retire after three decades and is offering an unusually generous transition of up to two years plus a 10% seller note. At a 3.51x cash flow multiple, this is priced in line with blue-collar trade comps, though the real diligence question is how much of the estimating and relationship capital walks out the door with the owner.

Why we like it

Earnings quality is strong for a trades business, with $577K of cash flow on $2.2M revenue, a 26% margin that beats many electrical contractors. The commercial-heavy mix (70%) tends to produce larger, more predictable project values than residential service work, and the repeat/referral base means revenue is not bought through advertising.
The moat is a 35-year regional reputation that drives repeat and referral work with minimal ad spend. In a licensed trade where reputation and relationships gate access to commercial bids, three decades of goodwill is genuinely hard to replicate and protects pricing power during slow periods.
Electrical work is about as recession-resistant as the trades get. Commercial facilities need maintenance, code compliance, backup power, and buildout work regardless of the cycle, and backup systems plus transfer panels are non-discretionary spend for businesses that cannot afford downtime.
The seller is offering up to two years of transition support plus a 10% carry, which is well above market and signals confidence. For a buyer worried about the owner being the key estimator, a two-year runway to absorb that knowledge materially lowers execution risk.

How to improve it

Build a recurring commercial service agreement program immediately. The business already does service calls, so converting commercial accounts to annual maintenance and inspection contracts creates predictable revenue and a reason for customers to call you first rather than shop the job.
Formalize and document the estimating process before the owner leaves. The owner personally handles estimates on larger commercial and design-build work, which is the single biggest key-person risk here, so codifying bid templates and training a second estimator is priority one in the first 90 days.
Reintroduce solar and expand generator services as the listing suggests. Generator and backup power demand is structurally rising, and bolting a higher-margin product line onto an existing commercial customer base is low-risk incremental revenue.
Add a modest digital marketing and lead-capture effort to supplement referrals. The business runs almost entirely on word of mouth, which is great until you want to grow, so a simple website, Google Business presence, and local service ads can diversify the pipeline.
Invest in the apprentice-to-journeyman pipeline. With only one Journeyman and one apprentice, labor capacity is a hard ceiling on growth, so a deliberate hiring and training plan is required before you can take on more volume.
Expand geographically into coastal and surrounding markets as flagged in the listing. With a proven commercial playbook, entering adjacent territories lets you reuse estimating and operational systems rather than reinventing them.
Tighten project-level job costing and margin tracking. Many trade shops leave margin on the table through poor change-order discipline and loose material markup, and disciplined job costing can lift the 26% margin without winning a single new customer.

Diligence notes

Quantify owner dependency on estimating and commercial relationships. The owner oversees estimates for larger commercial and design-build projects, so determine what share of revenue and gross profit flows through jobs the owner personally bids, and whether those customer relationships transfer.
Verify the revenue mix and customer concentration within the 70% commercial base. A handful of large repeat commercial accounts can drive the numbers, so pull a three-year customer-level revenue breakdown to confirm no single client is an outsized risk.
Scrutinize the add-backs behind the $577K cash flow figure and confirm against tax returns. Trade businesses often normalize owner compensation, vehicles, and personal expenses, so rebuild SDE to a true buyer-operator basis and reconcile to filed returns.
Confirm licensing, bonding, and the status of the single Journeyman. The business relies on one licensed Journeyman, so verify whether the license sits with the owner or stays with the team, and understand the retention risk and bonding capacity needed to keep bidding commercial work.
Review the backlog and work-in-progress at closing. Project-based contractors can show strong trailing numbers while the pipeline thins, so examine signed contracts, pending bids, and the historical conversion rate to assess forward revenue.
Clarify the facility arrangement. The 3,600 square foot office and warehouse is used for operations but is not stated to be included in the price, so confirm whether it is leased, who owns it, and what lease terms or purchase option exist post-sale.

Source

Originally listed on BizBuySell. View original listing →