Suffolk County Commercial Electrical Contractor - $6.3M Revenue, 33 Years Established
Full acquisition analysis: financials, market context, valuation, risk assessment, and 100-day integration plan.
View Original Listing ↗At a Glance
Established 1991 commercial electrical contractor serving NY/NJ with 70% renovation focus and 60% supermarket concentration. Strong repeat business (80-90%) driven by owner's industry leadership roles. 24 employees, $1.31M reconstructed SDE. Listed at $4M after previous deal fell through.
Key Strengths
- 33-year operating history with established client relationships across Long Island
- 80-90% repeat business rate demonstrates strong service quality and client retention
- Owner holds leadership positions in electrical community, providing network advantage
- 70% renovation/conversion work provides steadier cash flow than new construction
- Minimal marketing spend (1.0% revenue) due to referral-driven business model
Key Questions
- Why did previous acquisition fall through? Valuation gap, financing, or operational issues discovered?
- What is actual customer concentration? If top 3 supermarket chains exceed 40%, risk is elevated
- Are key client relationships transferable or dependent on owner's personal board positions?
- What percentage of $6.3M revenue requires union labor vs. non-union? Impacts margin sustainability
- How many of 24 employees are licensed electricians? What is succession plan for master electrician license?
- Are fire alarm and voice/data certifications held by company or owner personally?
- What is project backlog visibility? 3 months, 6 months, 12+ months contracted work?
- How does $1.45M reported SDE reconcile with $1.31M reconstructed SDE? What add-backs were included?
Reconstructed P&L
| Line Item | Amount | % Revenue | Benchmark |
|---|---|---|---|
| Gross Revenue | $6,296,467 | 100.0% | Reported |
| COGS (Materials) | –$2,203,763 | 35.0% | Industry avg: 35.0% |
| Direct Labor | –$2,203,763 | 35.0% | Industry avg: 35.0% |
| Gross Profit | $1,888,941 | 30.0% | Target: 28-35% |
| Vehicle / Fleet | –$188,894 | 3.0% | Est. range: 2-5% |
| Insurance (GL, WC, Auto) | –$157,412 | 2.5% | Est. range: 2-4% |
| Rent / Facilities | –$125,929 | 2.0% | Reported: $80K/yr = 1.3% |
| Office / Admin / Software | –$125,929 | 2.0% | Est. range: 1-3% |
| Other Overhead | –$94,447 | 1.5% | Est. range: 1-3% |
| Marketing | –$62,965 | 1.0% | Low due to referrals |
| Depreciation | –$25,186 | 0.4% | Est. range: 0.3-0.5% |
| Net Profit (before owner) | $1,108,179 | 17.6% | Calculated |
| Owner Salary Add-Back | $180,000 | 2.9% | $180K for $6M+ revenue |
| Depreciation Add-Back | $25,186 | 0.4% | Non-cash expense |
| EBITDA (Est.) | $1,133,365 | 18.0% | Benchmark: 15–20% healthy |
| Estimated SDE | ~$1,313,365 | 20.9% |
SBA Financing Model
Estimated SDE of ~$1,313,365 can support SBA 7(a) debt service on a $4,000,000 acquisition. Assuming 10% down ($400,000) and a 10-year term at ~10.5% SBA rates, annual debt service is approximately $582,919. Estimated pre-tax income to owner: ~$730,446+ after debt service.
Cash Flow Reality Check
Cash Conversion Cycle
Working Capital Recommendations
- Establish $750K Revolving Credit Facility: Secure working capital line before acquisition to cover May-August peak needs ($970K). Typical terms: Prime + 2-3%, 80% advance rate on A/R under 60 days. Prevents cash crunches during high-activity months when material purchases spike.
- Accelerate Receivables Collection: Current 35-day DSO is manageable but improvable. Implement progress billing on projects over $50K (invoice at 25/50/75/100% completion). Offer 2% 10-day discount for early payment. Target 28-30 day DSO to free $150-200K working capital.
- Negotiate Extended Payment Terms with Suppliers: Current 22-day payables can extend to 30-45 days for creditworthy buyers. Renegotiate terms with top 3 electrical suppliers (likely representing 60-70% of material spend). Each 10-day extension frees ~$150K in working capital.
- Material Inventory Management: Listed inventory of $85K seems low for $6.3M revenue (1.4% vs. industry norm 3-5%). Verify if just-in-time ordering or understated. Consider vendor-managed inventory programs for commodity items (wire, conduit) to reduce cash tied up in stock.
How Sticky Is the Revenue?
Customer Concentration (Est.)
Revenue Retention Estimate: 80-90% annual customer retention (broker-stated), significantly above industry average of 40-60% for commercial contractors
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 | $2,624,730 | $2,889,798 | $3,154,865 |
| EBITDA Multiple | $2,720,076 | $2,833,457 | $2,946,838 |
| Revenue Multiple | $2,518,587 | $3,148,234 | $3,777,880 |
Premium Factors
Discount Factors
Market & Comparable Transactions
Suffolk County electrical contracting market is highly fragmented (100-150+ competitors) but well-supplied with work. Residential construction rebounding in 2026 after rate moderation. Commercial renovation work steady. Critical headwinds: severe electrician shortage (BLS projects 14% workforce decline vs. 25% demand increase through 2030), 30% of union electricians near retirement, wage inflation ($75K+ baseline, $100K+ for specialists). Supermarket sector faces consolidation pressure and e-commerce disruption - Stop & Shop closed 32 underperforming stores in 2024.
| Comparable | Revenue | Multiple | Location |
|---|---|---|---|
| Service-focused electrical contractor, Suffolk County | $4.0M | 3.6x SDE | Suffolk County, NY |
| 60-year electrical contractor, residential/commercial/industrial | $539K-$1.5M | 0.5-1.0x revenue | Nassau/Suffolk County |
| Security/surveillance electrical specialty contractor | Not disclosed | Not disclosed | Suffolk County, NY |
Bull Case
Acquiring firm with existing electrical operation captures $6.3M revenue and 80-90% repeat client base at 2.1-2.4x SDE ($2.8-3.2M). Owner's 33-year network and board positions transfer through extended consulting (12-18 months). Supermarket renovation backlog provides 6-12 month revenue visibility. Cross-sell fire alarm monitoring contracts (recurring revenue) and energy efficiency upgrades to existing base. Pursue untapped healthcare/hospital market ($2M+ incremental revenue opportunity). Consolidate back-office with acquirer's platform, reducing overhead 200-300 bps. Union electrician shortage benefits established firms with trained crews vs. new entrants.
Bear Case
Top 3 supermarket clients represent 45%+ revenue; loss of anchor relationship post-transition triggers 20-30% revenue decline. Owner's board positions are non-transferable - referral engine stops, forcing competitive bidding (margin compression 5-10 points). Electrician shortage forces 15-20% wage increases to retain 24-person crew, compressing SDE to $1.0M. 'Back on market' reflects undisclosed issues: pending litigation, license transferability problems, or key employee departures. Commercial real estate slowdown reduces renovation pipeline. $4M purchase price at 3.0x SDE generates only $730K cash after debt service - insufficient return for operational risk.
Who You're Up Against
| Company | Type | Est. Revenue | Threat Level |
|---|---|---|---|
| K.J. Kenny Inc. | Independent | $5-10M | 60+ year presence, strong commercial focus, covers Nassau/Suffolk. Established reputation competes for same supermarket/retail clients. |
| TFC Electric Inc. | Independent | $3-7M | 30-year history, SCECA member, 24/7 emergency service differentiator. Full-service commercial/residential with strong local roots. |
| Nassau Suffolk Electrical Services | Independent | $2-5M | 275+ five-star Google reviews signal strong residential/small commercial presence. Marketing-savvy competitor with digital visibility. |
| Big Sky Electric | Independent | $1-3M | High service ratings, competitive pricing. Likely competes on smaller commercial and residential projects. |
| Bianco Electrical | Independent | $2-4M | Licensed contractor with multi-county reach to NYC. Geographic flexibility allows pursuit of larger regional projects. |
Competitive Advantages
Moat Assessment
NARROW MOAT with transferability risk. The 80-90% repeat business and 33-year track record create switching costs for established clients (learning curve, trust, proven performance). However, the moat is significantly dependent on owner's personal relationships and board positions - these are non-transferable intangible assets. Post-acquisition, the business must transition from 'trusted partner' status based on owner's reputation to company-based service quality. In a fragmented market with 100+ competitors, the competitive advantage is relationship-driven rather than structural (no proprietary technology, exclusive licenses, or cost advantages). The supermarket niche provides specialization benefits but also concentration risk. An acquirer must invest 12-18 months in relationship transfer and service delivery consistency to preserve the moat. Without successful transition, the business reverts to commoditized electrical contractor competing on price.
Risk Scores & Due Diligence
Due Diligence Priorities
- 1. Customer Concentration Analysis: Obtain 3-year customer revenue breakdown. Identify top 10 customers by revenue, contract status, and relationship strength. If top 3 exceed 40% or single customer exceeds 15%, require price reduction or earn-out structure.
- 2. Failed Deal Post-Mortem: Interview previous buyer (if possible) or broker to understand why prior transaction collapsed. Review any prior LOI terms, inspection reports, or walk-away reasons. This is critical red flag requiring explanation.
- 3. License and Relationship Transferability: Verify master electrician license transfer process (NY requires individual licensing). Identify which client relationships depend on owner's board positions vs. company reputation. Map transition plan for key accounts.
- 4. Workforce Stability and Compensation: Obtain employee roster with roles, tenure, certifications, and compensation. Identify flight risk among 24 employees. Assess market wage rates vs. current pay - gap indicates retention risk or margin compression.
- 5. Backlog and Pipeline Verification: Review signed contracts and backlog (should be 6-12 months for commercial work). Analyze bid pipeline and win rates. Understand how work is sourced: referrals vs. competitive bids vs. repeat clients.
- 6. Financial Reconciliation: Reconcile reported $1.45M SDE vs. reconstructed $1.31M. Obtain 3-year tax returns and P&L. Verify $180K owner salary assumption and validate add-backs (owner vehicle, health insurance, discretionary expenses).
- 7. Supermarket Sector Exposure: Assess which supermarket chains represent 60% revenue (Stop & Shop, King Kullen, ShopRite, Whole Foods). Research their Long Island footprint expansion/contraction plans. Model revenue impact if major chain exits market.
- 8. Insurance and Bonding Capacity: Review GL, WC, and auto insurance policies. Verify bonding capacity for large projects ($500K+). Confirm premiums align with 2.5% revenue estimate. Assess claims history - high claims suggest operational issues.
What Needs to Transfer
Potential Deal Breakers
- Master electrician license non-transferable - buyer MUST have licensed master electrician on staff or obtain license before close
- Union contract obligations (if applicable) - CBA wages/benefits could significantly impact margin assumptions if not disclosed
- Client contract change-of-control provisions - if major clients have consent rights and refuse transfer, 30%+ revenue at risk
100-Day Integration Playbook
- Negotiate 12-18 month seller consulting agreement with compensation tied to customer retention milestones
- Conduct joint customer visits with seller to top 15 accounts (representing 70%+ revenue)
- Transfer owner's board positions or establish buyer's industry presence through association membership
- Implement weekly leadership meetings with seller and key foremen to maintain project quality standards
- Benchmark employee compensation against market rates; implement retention bonuses for critical electricians (10-15% of pay)
- Cross-train employees on fire alarm and voice/data certifications to reduce single-person dependencies
- Digitize estimating and project management processes (Accubid, ServiceTitan) to reduce administrative overhead 1-2 points
- Renegotiate supplier agreements leveraging combined purchasing power if part of platform acquisition
- Launch healthcare/hospital electrical services targeting Long Island medical facilities ($1-2M incremental revenue)
- Develop solar installation capability through partnerships or hiring (NABCEP-certified installers)
- Introduce recurring revenue model: fire alarm monitoring contracts, preventive maintenance agreements (20-30% margin)
- Pursue competitive bidding for municipal and institutional projects to diversify beyond referral-only model
Value Creation Waterfall (3-Year Outlook)
Our Verdict
Verdict: Conditional — Proceed to LOI
CONDITIONAL PASS at $4M asking price; RECOMMENDED at $2.8-3.0M. This is a fundamentally sound business with strong repeat revenue and established market position, but valuation and concentration risks require price adjustment. The 'back on market' status and limited information disclosure suggest previous buyer discovered issues during diligence - proceed cautiously. Best suited for strategic buyer (existing electrical contractor) who can consolidate operations and leverage existing customer base rather than financial buyer requiring full SDE extraction.
Recommended Next Steps
- Request post-mortem on failed prior transaction - understand walk-away reasons before investing time
- Demand 3-year tax returns, detailed P&L, and customer revenue breakdown (top 20 accounts) before LOI
- Interview seller to assess relationship transferability and willingness to 18-month consulting arrangement
- Submit LOI at $2.8-3.0M (2.1-2.3x SDE) with 60-day due diligence contingency and customer retention earn-out
- Conduct field day: ride along on job sites, meet foremen and key electricians, observe work quality firsthand
- Engage NY electrical licensing attorney to map master electrician license transfer and timeline
- If supermarket concentration exceeds 50%, require 24-month seller consulting with clawback provisions
Suggested Offer Structure
$2.85M (2.2x reconstructed SDE) with structure: $2.6M at close + $250K earn-out tied to 85% customer retention at 12 months. Seller note: $400K at 6% over 5 years, subordinated to SBA financing. Include 18-month consulting agreement at $10K/month.
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Related Resources
Sources
BizBuySell Listing #2302684 · Lee Levinson Peterson Acquisition · Suffolk County Housing Market Data (2024-2026) · Bureau of Labor Statistics - Electrician Workforce Projections · National Electrical Contractors Association (NECA) Benchmarks · Suffolk County Electrical Contractors Association · Industry Interviews: K.J. Kenny, TFC Electric, Nassau Suffolk Electrical