Established Electrical Contracting Business Since 1978
Full acquisition analysis: financials, market context, valuation, risk assessment, and 100-day integration plan.
View Original Listing ↗At a Glance
A 46-year-old electrical contractor serving Broken Arrow and greater Tulsa with mixed residential, commercial, and light industrial work. The business operates debt-free with 7 employees (3 journeymen, 4 helpers) and 6 service trucks from a 7,000 SF leased facility. While the seller claims $750K SDE on $1.2M revenue (62.5% margin), industry benchmarks suggest true owner benefit is $336K after proper cost reconstruction. The $1.5M asking price represents 4.5x reconstructed SDE—well above market norms for this size operator.
Key Strengths
- 46-year operating history with established brand reputation in growing Tulsa metro market
- Debt-free operation with all trucks and equipment owned free and clear
- Diversified revenue mix across residential, commercial, and light industrial reduces sector concentration risk
- Experienced workforce with 3 licensed journeymen provides operational continuity
- Low facility cost at $3K/month ($36K annually) with lease through January 2027
- Growing Broken Arrow market (2% annual population growth) supports demand expansion
Key Questions
- How does seller justify $750K SDE claim? Request detailed P&L showing actual wages, materials, insurance, and overhead costs with supporting documentation.
- What is revenue breakdown by customer type (residential vs. commercial vs. industrial) and customer concentration (top 10 accounts)?
- Are the 3 journeymen licensed in their own names? Will they remain post-sale? What are current compensation levels?
- What is backlog of signed contracts? What percentage of revenue is recurring service agreements vs. project-based work?
- Facility lease expires January 2027—what are renewal terms and landlord's intentions? Any relocation risk or rent increase expected?
- What electrical contractor licenses does the business hold? Are they transferable or does buyer need independent licensure?
- What is accounts receivable aging? Any concentration in slow-paying commercial accounts?
- Does owner perform billable field work or solely manage? If billing hours, how will revenue replace those hours post-exit?
- What is historical revenue trend (last 3 years)? Has the business been growing, stable, or declining?
- Are there any outstanding warranty claims, contract disputes, or insurance claims that could create post-closing liability?
Reconstructed P&L
| Line Item | Amount | % Revenue | Benchmark |
|---|---|---|---|
| COGS (Materials) | –$420,000 | 35.0% | Industry avg: 35.0% |
| Direct Labor | –$420,000 | 35.0% | Industry avg: 35.0% |
| Gross Profit | $360,000 | 30.0% | Calculated |
| Vehicle / Fleet | –$36,000 | 3.0% | Industry range: 2-5% |
| Insurance (GL, WC, Auto) | –$30,000 | 2.5% | Industry range: 2-4% |
| Office / Admin / Software | –$24,000 | 2.0% | Industry range: 1-3% |
| Marketing | –$12,000 | 1.0% | Industry range: 0.5-3% |
| Rent / Facilities | –$24,000 | 2.0% | Industry range: 1-4% |
| Other Overhead | –$18,000 | 1.5% | Industry range: 1-3% |
| Depreciation | –$4,800 | 0.4% | Industry range: 0.3-0.5% |
| EBITDA (Est.) | $216,000 | 18.0% | Benchmark: 15–20% healthy |
| Estimated SDE | ~$336,000 | 28.0% |
SBA Financing Model
Estimated SDE of ~$336,000 can support SBA 7(a) debt service on a $1,500,000 acquisition. Assuming 10% down ($150,000) and a 10-year term at ~10.5% SBA rates, annual debt service is approximately $218,595. Estimated pre-tax income to owner: ~$117,405+ after debt service.
Cash Flow Reality Check
Cash Conversion Cycle
Working Capital Recommendations
- Establish $150K Operating Line of Credit: Secure revolving credit facility before acquisition to cover May-June peak working capital needs ($185K) and provide buffer for delayed commercial receivables. Target rate: Prime + 2-3%.
- Accelerate Commercial Collections: Implement progress billing on projects exceeding $10K to reduce cash cycle. Offer 2% 10-day discount to commercial customers currently paying in 45+ days. Target: reduce DSO from 35 to 28 days.
- Negotiate Extended Payment Terms with Suppliers: Leverage 46-year operating history to negotiate net-45 or net-60 terms with primary electrical supply houses. Current 22 DPO can likely extend to 35-40 days, improving cash conversion cycle by ~15 days.
- Build Pre-Season Material Inventory: Purchase $30K-$40K of common materials (wire, conduit, boxes, devices) in February-March at winter discounts to reduce lead times during peak season and lock in pricing before spring increases.
How Sticky Is the Revenue?
Customer Concentration (Est.)
Revenue Retention Estimate: Est. 75-85% annual retention (typical for established electrical contractors with strong local reputation and recurring commercial relationships)
Estimated percentage of revenue retained after an ownership transition, based on industry benchmarks and business characteristics.
Churn Risk Factors
What's This Business Worth?
| Method | Low | Mid | High |
|---|---|---|---|
| SDE Multiple (Reconstructed) | $900,000 | $1,000,000 | $1,100,000 |
| EBITDA Multiple (3.5x-4.5x) | $756,000 | $864,000 | $972,000 |
| Revenue Multiple (0.6x-0.8x) | $720,000 | $840,000 | $960,000 |
Premium Factors
Discount Factors
Market & Comparable Transactions
Broken Arrow is a thriving Tulsa suburb with population exceeding 115,000 and 2% annual growth, creating steady demand for electrical services across residential, commercial, and industrial sectors. The electrical contracting market is highly fragmented with 25-40 competitors ranging from independent operators to franchises like Mr. Electric. Oklahoma's skilled trades labor shortage (2.1M unfilled positions nationally by 2030) creates both opportunity and risk—strong pricing power but recruitment challenges. Recent regulatory changes doubled continuing education requirements (12 hours every 3 years as of January 2026), potentially reducing competition from smaller unlicensed operators.
| Comparable | Revenue | Multiple | Location |
|---|---|---|---|
| Small electrical contractors (median) | $1.7M | 2.55x SDE | National |
| Lower middle market electrical contractors | $15M-$40M | 6.2x-6.4x EBITDA | National (2024-2025) |
| Mid-market premium operators | $12M-$25M | 11.4x EBITDA | National (Q4 2024) |
Bull Case
The business operates in a supply-constrained market where electrician demand is growing 9.5% through 2034—triple the national average. With proper financial reconstruction revealing a credible $336K SDE, an acquisition at $900K-$1.1M (2.7x-3.3x) would generate strong returns under SBA financing. The debt-free operation, owned equipment, and experienced crew provide immediate operational continuity. Broken Arrow's 2% population growth and rising home values support organic expansion, while the fragmented competitive landscape offers bolt-on acquisition opportunities. A buyer with electrical contractor licensure could scale by adding 1-2 crews, expanding commercial work, and implementing modern CRM/dispatch systems—potentially reaching $2M+ revenue within 3 years.
Bear Case
The seller's $750K SDE claim is financially implausible—requiring less than 10% operating expenses on $1.2M revenue, which defies industry norms. At the $1.5M asking price (4.5x reconstructed SDE), debt service would consume 65% of cash flow, leaving minimal margin for working capital, growth investment, or economic downturns. The lease expires in 6 months with uncertain renewal terms, creating potential disruption and relocation costs. Three months of seller transition is insufficient for a 46-year owner-operator, risking customer and employee attrition. Oklahoma's electrician shortage (63K median salary can't attract sufficient talent) threatens crew expansion plans. If the owner performs billable field work, his exit removes both leadership and revenue-generating capacity simultaneously.
Who You're Up Against
| Company | Type | Est. Revenue | Threat Level |
|---|---|---|---|
| Tiger Electrical Services | Independent | $3M-$5M | Larger independent with 20+ years experience, strong healthcare and commercial customer base, established Tulsa reputation—competes directly for commercial service contracts |
| Mr. Electric of Tulsa | Franchise | $1M-$2M | Branded franchise with national marketing support and consumer recognition, primarily residential focus—competes on brand trust and online presence |
| Watt's Right Electric | Independent | $800K-$1.5M | Residential specialist emphasizing emergency services and customer service—competes for same residential service call market with similar scale |
| Hot Shot Electric | Independent | $2M-$3M | Multi-service capability including general contracting—competes for commercial projects through broader service offering and GC relationships |
| Firefly Electricians | Independent | $500K-$1M | Highly rated local operator with strong online reviews and customer satisfaction scores—competes on reputation and growing market share in residential segment |
Competitive Advantages
Moat Assessment
NARROW MOAT. The business benefits from local reputation and established customer relationships built over 46 years, but electrical contracting has low switching costs and minimal proprietary technology or processes. Customers can easily move to competitors if service quality declines or pricing becomes uncompetitive. The primary defensibility comes from: (1) relationship inertia with long-term commercial accounts that prefer incumbent providers, (2) operational execution and crew quality in tight labor market where journeymen are scarce, and (3) local market knowledge and permitting relationships. However, ownership transition significantly weakens relationship-based advantages. Long-term moat depends on buyer's ability to retain key employees, maintain service quality, and develop recurring commercial contracts that create switching friction.
Risk Scores & Due Diligence
Due Diligence Priorities
- 1. Financial Reconciliation: Obtain 3 years of tax returns, detailed P&Ls, and bank statements to validate actual SDE. Reconcile $750K claim against industry cost benchmarks. Verify owner salary treatment and identify all add-backs.
- 2. License Transferability Assessment: Confirm business holds Oklahoma Unlimited Electrical Contractor license. Determine if transferable or buyer must independently qualify with 8,000 hours experience (4,000 commercial/industrial). Verify all journeymen hold valid licenses.
- 3. Customer Concentration Analysis: Request customer list with trailing 12-month revenue by account. Assess concentration risk, contract terms, payment history, and retention likelihood post-ownership change. Verify service agreement renewal rates.
- 4. Employee Retention Planning: Interview 3 journeymen to assess post-sale retention risk. Verify current compensation, licensure status, and non-compete restrictions. Develop retention incentive plan before closing.
- 5. Facility Lease Negotiation: Immediately engage landlord to negotiate lease extension beyond January 2027. Assess relocation costs if renewal not possible. Evaluate alternative facilities in Broken Arrow trade area.
- 6. Backlog and Pipeline Verification: Review all signed contracts, pending proposals, and recurring service agreements. Validate $1.2M annual run-rate is sustainable. Assess seasonality and project concentration risk.
- 7. Insurance and Compliance Audit: Verify commercial general liability ($50K+ required), workers' compensation, and auto insurance are current. Review safety record, OSHA compliance, and any outstanding claims or violations.
What Needs to Transfer
Potential Deal Breakers
- Buyer lacks Oklahoma Unlimited Electrical Contractor License and cannot qualify (8,000 hours experience required—would make business non-operational)
- Landlord refuses lease assignment or extension beyond January 2027 (relocation would cost $40K+ and disrupt customer relationships)
- Loss of 2+ journeymen electricians during transition (eliminates operational capacity and revenue-generating ability)
- Discovery that business lacks required insurance or has significant outstanding claims creating successor liability
100-Day Integration Playbook
- Accompany seller on key customer visits to transfer relationships (focus on top 20 accounts representing 50%+ revenue)
- Implement retention bonuses for 3 journeymen ($5K each vesting at 12 months post-close)
- Document all vendor relationships, pricing agreements, and operational procedures
- Negotiate lease extension with landlord before January 2027 expiration
- Obtain Oklahoma Unlimited Electrical Contractor license if buyer doesn't hold one (requires 8,000 hours experience)
- Deploy field service management software (ServiceTitan or similar) to improve dispatch efficiency and reduce administrative time
- Implement formal estimating process with margin targets: 35% gross margin minimum on new projects
- Shift marketing focus toward higher-margin commercial service agreements and away from low-margin residential service calls
- Hire office manager/dispatcher to remove owner from daily scheduling (cost: $45K annually)
- Develop standardized safety and quality processes to reduce insurance claims and improve crew productivity
- Recruit and hire 1 additional journeyman and 2 helpers to form second crew (target revenue add: $400K annually)
- Expand service area into South Tulsa and Bixby markets with additional service truck
- Develop recurring commercial maintenance contracts targeting 20% of revenue (predictable cash flow, higher margins)
- Launch generator installation service line capitalizing on Oklahoma storm season demand
- Explore bolt-on acquisitions of smaller 1-2 person electrical operators in Tulsa metro to consolidate market share
Value Creation Waterfall (3-Year Outlook)
Our Verdict
Verdict: Conditional — Proceed to LOI
PASS at $1.5M asking price. The seller's $750K SDE claim is unsupported by industry cost structures—reconstructed analysis shows $336K true SDE, making the asking price 4.5x cash flow. At this valuation, debt service would consume 65% of cash flow, creating unacceptable risk. However, the underlying business has merit: 46-year track record, debt-free operation, owned equipment, and favorable market dynamics in growing Broken Arrow. COUNTER-OFFER at $900K-$950K (2.7x-2.8x reconstructed SDE), contingent on full financial due diligence validation and 6-month seller transition. At this price, SBA financing would yield acceptable 1.5x+ debt service coverage and potential for strong returns through operational improvements and scale expansion.
Recommended Next Steps
- Request 3 years of business tax returns (1120/1120S), detailed P&Ls, and trailing 12-month bank statements to validate actual profitability
- Submit written LOI at $900K-$950K with 30-day exclusivity, contingent on satisfactory due diligence and 6-month seller transition commitment
- Verify Oklahoma Unlimited Electrical Contractor license transferability or confirm buyer's qualification path (8,000 hours experience requirement)
- Conduct on-site visit to assess equipment condition (6 trucks, tools, inventory), meet 3 journeymen, and evaluate facility suitability
- Interview top 10 customers (representing ~40% revenue) to assess relationship strength and retention likelihood post-sale
- Engage commercial insurance broker to quote GL, WC, and auto coverage—validate seller's $30K estimate and identify any red flags
- Negotiate lease extension with landlord immediately—current lease expires January 2027, creating near-term relocation risk if not resolved
Suggested Offer Structure
$900K-$950K (2.7x-2.8x reconstructed SDE) with 30-day exclusivity, contingent on: (1) full financial validation showing minimum $320K true SDE, (2) 6-month seller transition, (3) retention of all 3 journeymen, (4) lease extension through January 2029+, (5) no customer concentration exceeding 15% with any single account. Structure as asset purchase with $90K-$95K down (10%) and SBA 7(a) financing. Include seller note of $50K (5% of price) subordinated to SBA, payable over 3 years, to demonstrate seller confidence in business sustainability.
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Related Resources
Sources
BizBuySell Listing #2531584 · Oklahoma Construction Industries Board licensing requirements · U.S. Bureau of Labor Statistics electrician employment projections · IBISWorld electrical contractors industry benchmarks · Tulsa Regional Chamber economic data · DealStats small business valuation multiples