Full Service Electrical Contractor, 1986-Established South Dakota

$7.5M

Revenue

$710K

SDE

1.4x

Multiple

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Full Editorial Writeup

This is a nearly four-decade-old full-service electrical contractor operating across South Dakota, serving both residential and commercial customers. The service mix is genuinely diversified: panel upgrades, EV charger installs, lighting design, standby generators, troubleshooting and repair, remodel wiring, tenant build-outs, smart-home integration, 24/7 emergency service, and even foundation drilling. With 21 full-time employees and a Monday to Friday core schedule, this is a real operating business with crews in the field, not an owner swinging a hammer solo.

The numbers are the headline. At $7.5M in revenue and $710K in cash flow, the business carries a roughly 9.5% owner-earnings margin, which is typical for a labor-heavy trade contractor. The asking price of $999,000 against that cash flow is a 1.41x multiple, which is unusually cheap for a going concern this size. That low multiple almost always signals either customer concentration, key-person dependence, working-capital intensity, or earnings that lean on the seller's own billable hours. All of that needs to be unpacked in diligence.

The business serves homeowners, builders, and commercial clients, which spreads demand across cycles and end markets. Electrical work is non-discretionary and increasingly code-driven (EV chargers, generators, smart-home), so demand is durable. The real property is NOT in the asking price: it is available separately at $1.299M or roughly $6,457/month in rent, so a buyer must underwrite occupancy cost on top of the purchase.

Why we like it

Earnings quality is anchored in essential, non-discretionary trade work: panel upgrades, repairs, emergency calls, and code-driven installs that get done in any economy. At $710K cash flow on $7.5M revenue, this is a real business with 21 employees, not a one-man shop, which gives the earnings more institutional staying power.
The moat is reputation and relationships built since 1986, plus the hard reality that electrical work requires licensure. An electrician license is required to operate, which thins the buyer pool and protects margins against undercapitalized competitors entering the market.
Market tailwinds are strong: EV charger installs, standby generators, and smart-home integration are all growing demand categories driven by code and consumer adoption. These higher-ticket services layer onto a steady base of residential and commercial repair and build-out work.
The price is the standout. A 1.41x cash flow multiple on a $7.5M-revenue contractor is well below typical trade-services comps of 2.5x to 3.5x, meaning the downside is protected if diligence confirms the earnings are durable and not purely owner-dependent.

How to improve it

Audit and raise pricing on service and emergency calls within the first 90 days. Trade contractors with long tenure almost always underprice relationships, and a 5 to 10% rate increase on labor flows almost entirely to the bottom line given the fixed cost base.
Build recurring revenue by launching generator and electrical maintenance agreements for commercial clients and builders. Converting even a fraction of the customer base into annual service contracts smooths revenue and lifts the exit multiple materially above the 1.41x this seller accepted.
Lean hard into the EV charger and standby generator categories with dedicated marketing and financing offers. These are high-ticket, high-margin installs with growing demand, and most legacy electrical firms underinvest in capturing them.
Install a general manager or lead estimator to reduce owner dependence. The seller is active and retiring with only 30 days of transition, so building a management layer early is essential to protect continuity and support a cleaner future exit.
Tighten job costing and project margin tracking on tenant build-outs and remodel wiring. Labor-heavy contractors leak profit on poorly scoped jobs, and a basic estimating-to-actuals system can recover several points of margin.
Decide on the real estate early and negotiate it as a package. The property is offered separately at $1.299M or $6,457/month rent, and controlling the facility either via purchase or a long lease protects the operation from relocation risk.

Diligence notes

The 1.41x multiple is the single biggest flag and must be explained. Pull three years of financials and confirm whether the $710K cash flow is sustainable with hired labor or whether it leans heavily on the retiring owner's own billable work and estimating.
Verify customer and builder concentration. A business serving homeowners, builders, and commercial clients can still have one or two builders driving a disproportionate share of revenue, which would justify the low price and create real risk.
Confirm the license situation and transferability. An electrician license is required to operate, so a buyer must either hold the qualifying license or retain a licensed master electrician on staff, and the 30-day transition window may be too short for this.
Scrutinize working capital and the $756K of inventory excluded from the price. A $7.5M contractor carries meaningful work-in-progress and receivables, so model the real cash needed to run the business beyond the $999K purchase price.
Evaluate the real estate decision and its cost. The property is a separate $1.299M purchase or $6,456.56/month rent, which adds roughly $77K annually to the cost structure and must be factored into the true all-in return.
Assess the 21-person workforce and key-person risk among the crews. Confirm wage rates, tenure, and whether lead foremen or estimators are likely to stay post-close, since the value of a trade business walks out the door with its skilled labor.

Source

Originally listed on BizBuySell. View original listing →