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This is a 16-year-old renewable-energy electrical contractor based in the Sierra Nevada foothills of Northern California, serving the greater Sacramento market. The company installs solar systems, battery storage, backup generators, and EV charging stations, and it also handles service, maintenance, and upgrades of existing systems. Notably, the revenue mix skews commercial: roughly 80% of the client base is commercial and municipal, with the remaining 20% residential. That is a meaningful distinction because commercial and government work tends to carry larger project sizes, longer relationships, and steadier demand than the churn-heavy residential solar market.
Operations run on a 12-person team including a Project Manager, an Office Manager, a Journeyman Electrician, 3 Apprentices, and a field/tech crew, working out of a 6,000 sq ft facility with a 4,000 sq ft warehouse and 2,000 sq ft of office space. On $3.3M of revenue the business throws off $617K of owner cash flow, an 18.7% margin that is healthy for an electrical contractor. At a $950K asking price that is a 1.54x multiple on cash flow, which is cheap on its face and a signal that a chunk of that cash flow is likely tied to the owner's own production or relationships.
The seller is offering an unusually strong deal structure: a 3-year transition commitment and 20% seller financing ($190,000) carried as a show of good faith. Growth levers include expanding statewide commercial and government contracts, adding sales and field capacity, scaling battery and EV charging installations, and converting service calls on aging solar systems into larger upgrade jobs.
Why we like it
- The multiple is the headline. Paying 1.54x on $617K of cash flow means the entire purchase price is theoretically returned in roughly a year and a half of earnings, and with 20% seller financing the equity check shrinks further. That is meaningful downside protection if the earnings prove real and transferable.
- The commercial and municipal mix is the quality driver here. With 80% of the client base being commercial and government, this business avoids the door-to-door residential solar churn and price wars that have crushed the consumer side of the industry. Municipal work in particular is sticky, budget-backed, and less rate-sensitive than homeowner discretionary spend.
- The seller's commitment de-risks the transition dramatically. A 3-year stay plus carrying 20% of the price is the strongest alignment structure you can ask for from an exiting owner. It tells you the seller believes in continuity and gives you time to build direct relationships with the commercial accounts.
- There is a built-in recurring-revenue conversion engine hiding in the model. The installed base of aging solar systems generates service calls that can be upsold into full upgrade and battery-add projects. That is a low-cost, warm-lead pipeline most contractors would kill for, and it is currently under-monetized.
How to improve it
- Build a formal service and maintenance plan offering for the existing installed base. Right now service is reactive; packaging annual inspection, monitoring, and priority-repair contracts would create genuine recurring revenue and smooth the lumpy project cash flow. Even a small attach rate on the aging solar fleet materially changes the earnings profile.
- Systematize the commercial and municipal bidding pipeline to expand statewide. The listing flags government work as a growth lever, so hire or train a dedicated estimator and pursue public-agency prequalifications and prevailing-wage jobs beyond the immediate foothills territory. Government contracts are slow to win but durable once you are on the approved vendor list.
- Add dedicated sales and field capacity to break the owner-dependence ceiling. The 1.54x multiple suggests the owner is personally driving a chunk of sales and relationships, so use the 3-year transition to hire and ramp a sales lead who owns the commercial pipeline. This is the single most important thing to build before the owner rolls off.
- Lean hard into battery storage and EV charging attach on every solar job. California's grid instability and commercial demand-charge economics make storage a natural upsell, and EV charging is a fast-growing municipal and commercial line item. Bundling these into standard proposals raises average project value without adding customer acquisition cost.
- Tighten job costing and gross margin tracking by project type. On $3.3M of revenue with an 18.7% cash flow margin, small improvements in bid accuracy and labor utilization flow straight to the bottom line. Understand which service lines (new install vs. upgrade vs. service) actually make money before scaling the wrong ones.
- Cross-sell generator installations to the solar and commercial base. The company already installs generators, so backup power is a natural companion sale for commercial clients worried about grid reliability and outages. This diversifies revenue away from solar incentive cycles and toward resilience spending that holds up in any economy.
Diligence notes
- Verify how much of the $617K cash flow depends on the owner personally. The low 1.54x multiple usually signals owner-dependence, so quantify what he does day to day, which customer relationships are his, and whether the Journeyman Electrician's license is tied to him or transferable. The 3-year stay helps, but you need to know what you are actually buying.
- Scrutinize revenue durability against the solar incentive and policy backdrop. California's shift to NEM 3.0 has hammered residential solar economics, and while this business is 80% commercial, confirm how tax credits, rebates, and utility rate changes affect the commercial and municipal pipeline. Understand the backlog and contracted work versus one-time project revenue.
- Confirm the contractor licensing structure and who holds the qualifying license. An electrical and renewable-energy contractor lives or dies by its C-10 and related licenses, so identify the Responsible Managing Officer, whether that person is staying, and what it takes to keep the license valid post-close. A licensing gap can halt operations entirely.
- Analyze customer concentration within the commercial and municipal base. Government and commercial work can mean a handful of large accounts driving most revenue, so pull a customer-by-customer revenue breakdown for the last three years. Losing one anchor municipal relationship could swing the earnings hard.
- Assess the real estate and facility situation. The 6,000 sq ft facility is not included in the price, so confirm whether it is leased, the lease terms, rent, and whether the location transfers. Warehouse and yard space matters for an installation contractor, and an unfavorable or expiring lease is a hidden cost.
- Review the backlog, pipeline, and revenue recognition timing. Project-based contracting can look profitable on trailing numbers while the forward pipeline is thin, so validate signed contracts, work-in-progress, and seasonality. Confirm the trailing $3.3M revenue and $617K cash flow with tax returns and job-level financials, not just a summary.
Source
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