Residential Electrical Contractor, Eastern Kansas Homebuilder Subcontractor

$8.1M

Revenue

$1.9M

SDE

5.5x

Multiple

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Full Editorial Writeup

This is an established residential electrical contracting business in eastern Kansas doing over $8M in annual revenue and tracking to more than $1.9M in cash flow this year, annualized from results through August. The company handles new-construction rough-ins, trim-outs, and service work for a broad base of national, regional, and local homebuilders, backed by a dedicated service department plus light commercial and underground capability. Crucially, work is awarded at the subdivision level rather than bid lot by lot, so a single builder win carries a multi-year production run rather than a one-off job.

The operation runs through a full bench of foremen with territory split across the market, plus long-tenured subcontract crews that work exclusively for the company. A licensed master electrician is held on staff independent of ownership, so the qualification bench that any acquirer needs already exists. Ownership is already out of the daily field work and focused on bidding and builder relationships, and an owner-built estimating model with preloaded standard bids, PO history, and vendor accounts conveys with the sale.

The balance sheet is clean: no notes payable, assets convey free and clear, billing is on completion with roughly 30-day collection terms and no retainage held. The company also carries a substantial material position that lets it hold price and take on volume without waiting on supplier allocation. The stated constraint on growth has been ownership's available hours, not demand, which is the profile of an identified-upside business rather than a turnaround.

Why we like it

Earnings quality is strong for a trades business: over $1.9M in cash flow on $8.14M revenue is a roughly 23 percent margin, with a clean balance sheet carrying no notes payable and assets conveying free and clear. Billing on completion with 30-day terms and no retainage means cash converts fast and the seller is not financing builders' balance sheets. The one caveat is that cash flow is annualized from August results rather than a completed twelve months.
The moat is real and specific: subdivision-level awards rather than lot-by-lot bidding mean a single builder win locks in a multi-year production run, and relationships are spread across many accounts rather than concentrated in one. The material position insulates against supply and price swings, and jurisdictional licensing is already in place across the towns the company works. That combination is hard for a fragmented base of local subs to replicate.
Homebuilding demand in the Midwest remains constrained by chronic housing undersupply, and the company sits on the pick-and-shovel side of new construction as an essential subcontractor rather than a speculative builder. Even if a single builder pulls back, the diversified account base and multi-year subdivision runs cushion the cycle. The adjacent metro across the state line is greenfield the company has never touched.
The operator advantage is that ownership is already out of the truck and the master license is held on staff independent of the owner, so a platform buyer inherits a management layer, not a job. The stated growth ceiling is the owner's available hours, meaning a buyer with capacity to add crews and open the adjacent market inherits identified upside. The owner-built estimating model with preloaded bids and vendor accounts de-risks the transition.

How to improve it

Build out the deliberately underbuilt service division, which is starved today because bidding and production absorb ownership's hours. Service work carries higher margins and less cyclicality than new-construction rough-ins, so hiring dedicated service techs and a dispatcher creates a countercyclical revenue stream inside the existing customer base within the first 90 days.
Capture the finishing and add-on work that homeowners in the company's own subdivisions currently hand to other contractors. These are warm leads inside neighborhoods the company already wired, so a simple homeowner outreach and referral motion converts existing goodwill into incremental revenue at near-zero acquisition cost.
Open the adjacent metropolitan market across the state line using existing crews, material, and estimating systems. Because the estimating model, vendor accounts, and licensing framework already exist, entry is a matter of securing local jurisdictional licensing and one anchor builder rather than building from scratch.
Add field capacity against work already awarded but not yet started. There is a backlog the company cannot yet fully staff, so recruiting or subcontracting additional crews directly converts committed contracts into billed revenue rather than chasing new demand.
Formalize the master electrician retention and licensing continuity before close. Since the qualification bench sits with staff rather than ownership, lock those individuals into retention agreements and cross-train a second qualifier to remove single-person licensing risk.
Grow the light commercial book alongside the core residential business. The company already has underground and light commercial capability, so adding commercial estimating capacity diversifies revenue away from a single-builder cycle and smooths the seasonality of new residential starts.
Institutionalize the owner-built estimating model into a documented, transferable system with SOPs. The preloaded bids and vendor history are currently tied to the owner's knowledge, so codifying them protects margin discipline as the owner steps back from bidding over time.

Diligence notes

Cash flow is annualized from results through August, not a completed twelve months, so verify the full trailing twelve-month figure and understand seasonality of residential construction in eastern Kansas. Confirm whether the annualization reflects a strong partial year that may not hold through winter slowdowns.
Builder concentration is claimed to be spread across many accounts, but confirm the revenue split by builder and the length and renewal terms of the largest subdivision awards. A single builder pulling back mid-run could materially hit revenue, so quantify how much of the book is tied to the top three accounts.
The master electrician license is held on staff independent of ownership, which is the linchpin of the entire deal. Verify the licensing arrangement, the qualifier's employment terms, and whether that person intends to stay post-close, because losing the qualifier could halt operations.
Ownership offers to stay in sales and bidding with no time limit, which is both an asset and a dependency risk. Assess how much of the builder relationships and bidding accuracy live in the owner's head versus documented systems, and structure earnout or retention that transfers those relationships rather than perpetuating reliance.
The substantial material position that insulates pricing ties up working capital and carries obsolescence and valuation risk. Audit the inventory value, turns, and whether it is included in the asking price or a separate working capital adjustment, and confirm assets truly convey free and clear as stated.
Long-tenured subcontract crews that work exclusively for the company create potential worker-classification exposure. Review the subcontractor agreements and 1099 versus W-2 treatment, because a reclassification could add material labor cost and tax liability post-close.

Source

Originally listed on BizBuySell. View original listing →