Renewable Energy & Generator Installation, 16-Year Northern California Contractor

$3.3M

Revenue

$617K

SDE

1.5x

Multiple

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Full Editorial Writeup

This is a 16-year-old renewable energy contractor based in the Sierra Nevada foothills of Northern California, running out of Sacramento. The company installs solar, battery storage, generators, and EV charging stations, and it also services and upgrades existing systems. The customer mix is heavily weighted toward commercial and municipal work at roughly 80%, with the remaining 20% residential. That skew matters: commercial and government jobs tend to be larger, stickier, and less prone to the marketing arms race that plagues residential solar installers.

The operation is staffed by a team of 12 including a project manager, office manager, a journeyman electrician, three apprentices, and a tech team, and it runs from a 6,000 sq ft facility split between a 4,000 sq ft warehouse and 2,000 sq ft of office. On $3.3M of revenue the business throws off $617K of cash flow, an 18.7% margin that is healthy for a specialty electrical contractor. At a $950K asking price that is a 1.54x multiple, which is cheap for a business of this size and vintage.

What makes this deal notable is the seller structure. The active owner has committed to a three-year transition and is willing to carry 20% of the purchase price, meaning the seller keeps roughly $190K of skin in the game and stays hands-on long enough to actually transfer the customer relationships, the licensing knowledge, and the municipal bid pipeline. For a buyer worried about key-man risk in a founder-led contracting business, that alignment is worth a lot.

Why we like it

The numbers are clean and the price is aggressive: $617K of cash flow on $3.3M of revenue is an 18.7% margin, and the 1.54x multiple is well below what specialty electrical contractors of this scale usually trade for. With the seller carrying 20%, a buyer needs roughly $760K down before working capital, and the deal can likely be structured to service debt comfortably from year-one cash flow.
The 80% commercial and municipal revenue mix is the real story here. Government and commercial contracts are larger and less exposed to the door-knocking, credit-driven churn that destroys residential solar installers, and municipal relationships built over 16 years are hard for a new entrant to replicate. That customer base gives the business more staying power than a typical residential rooftop shop.
The seller offering a three-year transition plus a 20% seller note is unusually strong alignment. It de-risks the key-man problem inherent in a founder-run contractor, buys time to transfer licensing, bidding, and relationship knowledge, and signals the seller genuinely believes the business will perform after close rather than just cashing out.
There is a real installed-base annuity buried in the model. Sixteen years of installs means a growing fleet of aging solar and battery systems needing service, warranty work, and upgrades, and the listing flags converting service calls into larger upgrade projects. A buyer who builds that service function into a recurring maintenance program turns one-time installs into repeat revenue.

How to improve it

Build a formal service and maintenance contract program on top of the installed base. Sixteen years of solar and battery installs is a captive book of customers with aging systems, and packaging annual monitoring, cleaning, and inspection into recurring agreements creates predictable revenue and warm leads for upgrade projects.
Systematize the municipal and commercial bid pipeline before the owner's three years are up. Document the bidding process, prequalification lists, bonding relationships, and the specific agencies that award repeat work so the pipeline survives the founder's exit rather than walking out the door with him.
Add dedicated sales and estimating capacity. The listing explicitly flags adding sales and field capacity as a growth lever, and a 12-person shop where the owner likely drives most business development is leaving revenue on the table. A commissioned commercial salesperson could expand statewide government work without proportional overhead.
Lean harder into battery storage and EV charging, which carry higher margins and stronger policy tailwinds than commodity solar. California mandates and utility rate structures are pushing commercial customers toward storage and fleet charging, and the team already installs both, so the capability exists and just needs marketing focus.
Tighten job costing and gross margin tracking by project type. On a $3.3M contractor, small improvements in estimating accuracy and change-order discipline flow straight to the bottom line, and a buyer should install project-level P&L visibility immediately to identify which work is actually profitable.
Invest in apprentice retention and journeyman pipeline. With three apprentices and one journeyman, labor capacity is the binding constraint on growth, and a structured path to promote apprentices into licensed electricians both cuts hiring costs and unlocks the ability to run more crews concurrently.

Diligence notes

Scrutinize revenue concentration within the commercial and municipal base. An 80% commercial/municipal mix is a strength only if it is spread across many accounts; if two or three municipal contracts drive most revenue, the loss of a single relationship or an unfavorable rebid could gut the business, so pull a customer-by-customer revenue breakdown for the last three years.
Verify the contractor licensing and how it transfers. This is a licensed electrical and solar contractor in California, and the qualifying license may be tied personally to the owner or a specific employee. Confirm exactly whose license the business operates under and what a buyer needs to maintain C-10 and C-46 licensure post-close.
Examine the health of the project backlog and pipeline, not just trailing revenue. Contractor income is lumpy and dependent on signed work; ask for the current backlog, work-in-progress schedule, and bid pipeline to confirm the $617K cash flow is not a one-time peak driven by a couple of large finished jobs.
Test exposure to solar tax credit and policy changes. Renewable installs are sensitive to federal ITC levels and California net-metering rules (NEM 3.0 already cut residential solar economics), so understand how much revenue depends on incentives that could change and whether the commercial and generator segments provide insulation.
Confirm the terms and security of the 20% seller note. A carried note is attractive, but diligence the interest rate, term, subordination to any senior lender, and whether there are performance-based offsets, since the strength of that alignment depends entirely on the note structure.
Assess whether the facility is leased and on what terms. The 6,000 sq ft facility is not included in the sale, so verify the lease rate, remaining term, and renewal options, because a below-market lease expiring soon or a landlord who is the seller could materially change the cost structure after close.

Source

Originally listed on BusinessBroker.net. View original listing →