Industrial Motor & Generator Service Company, 55-Year Tennessee Operation

$2.7M

Revenue

$518K

SDE

11.6x

Multiple

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Full Editorial Writeup

This is a 55-year-old industrial service company based in the Mid-South region of Tennessee that repairs and services electric motors, generators, switchgear, and power generation equipment for manufacturing and industrial customers. The work is fundamentally break-fix and maintenance driven: when a plant's motor fails, production stops, and this company is who they call. That dynamic creates sticky, repeat demand from a diversified base of industrial clients who cannot afford downtime.

The operation runs on 13 full and part-time employees with average tenure of 10 to 15 years, which matters enormously in a trade where specialized knowledge of motor rewinding and switchgear is hard to replace. The business owns its real estate (valued at $1.8 million), carries $900,000 in inventory, and holds $1.2 million in specialized equipment and FF&E. Roughly $3.9 million of the $6 million asking price is tangible hard assets.

On a going-concern basis, this is a $2.7 million revenue shop throwing off $517,582 in cash flow, and the seller is retiring after decades at the helm. The headline 11.59x multiple is misleading because it is calculated on cash flow alone while real estate, inventory, and equipment make up the bulk of the price. Strip out the asset value and the operating business is being priced at a much more sensible multiple, which is the real story a buyer needs to underwrite.

Why we like it

Earnings quality is anchored in non-discretionary industrial repair work. When a manufacturer's motor, generator, or switchgear fails, production halts and repair is not optional, so demand persists through downturns and is not something plants defer. The diversified customer base reduces reliance on any single account.
The moat is built on 55 years of reputation, deep customer relationships, and a workforce averaging 10 to 15 years of tenure in a trade with a serious skilled-labor shortage. Motor rewinding and switchgear service require hands-on expertise that new entrants cannot spin up quickly. Name recognition across the Mid-South compounds this durability.
Market tailwinds favor repair over replacement of aging industrial equipment, especially as new equipment lead times and costs stay elevated. Reshoring and continued manufacturing activity in the Southeast support baseline demand. Power generation and switchgear work also ties into grid reliability spending.
The operator advantage is real for a buyer willing to add sales and field-service capacity. The seller flags expansion through additional field service operations, and a $2.7 million revenue base with sticky accounts is a solid platform to grow rather than a fragile one to defend.

How to improve it

Reprice the deal against the asset stack in the first 90 days. With $1.8 million real estate, $900,000 inventory, and $1.2 million equipment against $517,582 cash flow, structure the operating goodwill separately and consider whether to buy or lease the real estate to lower the entry check and preserve capital.
Build a formal field-service arm, which the seller explicitly names as the growth lever. On-site emergency repair commands premium pricing and reduces reliance on customers hauling equipment to the shop, expanding both revenue per job and geographic reach.
Introduce recurring preventive-maintenance contracts for motors, generators, and switchgear. Converting reactive break-fix relationships into scheduled inspection and service agreements smooths revenue, increases customer lock-in, and raises the resale multiple on a future exit.
Address key-person and succession risk early given the 10 to 15 year average tenure. Document tradecraft, cross-train, and set up an apprenticeship pipeline so the loss of one senior technician does not impair the ability to serve accounts.
Tighten pricing and job costing. A shop this old often leaves margin on the table with legacy pricing; implement standardized quoting, labor-rate reviews, and markup discipline on parts to expand cash flow without adding revenue.
Modernize the sales function and CRM. Decades of relationships likely live in the owner's head, so building a documented account list, contact cadence, and outbound effort to adjacent industrial plants protects the base and drives new logos.
Evaluate the $900,000 inventory position for dead and slow-moving stock. Freeing trapped working capital by liquidating obsolete parts improves returns and clarifies what inventory actually supports the business.

Diligence notes

Deconstruct the 11.59x multiple immediately. The price is dominated by hard assets, so verify the real estate appraisal at $1.8 million, confirm the $900,000 inventory is current and saleable, and independently value the $1.2 million in equipment to understand what you are truly paying for the operating business.
Scrutinize customer concentration despite the diversified claim. Pull revenue by account over three years to confirm no single manufacturer drives an outsized share, and assess how many key relationships are personally tied to the retiring owner versus the firm.
Assess the workforce risk in detail. With only 13 employees carrying the specialized expertise, identify who holds the critical rewinding and switchgear knowledge, review compensation and retention risk, and confirm whether any are near retirement themselves.
Verify the cash flow figure and normalize it. Request three years of tax returns and financials, confirm the $517,582 SDE add-backs, separate any real-estate expense treatment, and validate that revenue and margins are stable rather than declining under an aging owner.
Investigate environmental and regulatory exposure. Motor and generator service can involve solvents, oils, and hazardous waste, so order a Phase I environmental assessment on the owned property before assuming the real estate at face value.

Source

Originally listed on BizBuySell. View original listing →