Selling your electrical contracting business

01Compliance testing, maintenance and installation

Many electrical contractors carry out work that recurs: periodic inspection and testing of fixed installations, emergency lighting testing, portable appliance testing, thermographic surveys and planned electrical maintenance. Alongside that sits reactive work, remedial works identified during testing and installation projects.

Buyers will want to see how revenue and margin split between these activities. Recurring testing and maintenance often provides the most predictable base, while remedials and projects can add significant value when they are priced and managed well.

The more clearly you can show which work recurs, which follows from it and which is one-off, the easier it is for a buyer to understand your business.

02Recurring testing programmes and customer relationships

Periodic inspection and testing work is driven by inspection intervals rather than fixed annual contracts, so buyers will want evidence of how reliably it comes back. Typically they will ask about:

• The sites you test and how inspection dates are scheduled and tracked.
• Whether customers return for each cycle and how long relationships have lasted.
• How remedial work identified in reports is quoted and converted.
• Any framework agreements, multi-site customers or facilities management relationships.

A well-maintained schedule of due dates and customer history can make a real difference to how this revenue is viewed.

03Scheme registration, competence and qualified supervisors

Electrical contractors often rely on competent person scheme registration — for example with NICEIC or NAPIT — and may also be members of trade bodies such as the ECA. Work is generally expected to follow BS 7671, the IET Wiring Regulations.

Scheme registration usually requires a nominated qualified supervisor. If that person is the owner, buyers will see an obvious dependency and will want to know who else in the business could take on the role.

Buyers will also look at the qualifications, grading and training of your electricians — for example JIB grading where relevant — and how competence is evidenced in practice.

04Project work, main contractors and working capital

Installation work for main contractors can be substantial, but it brings particular risks: tender pricing, variations, retentions, payment terms and the financial strength of the contractors you work for.

Expect a buyer to review open projects, work in progress, outstanding retentions, any disputes and how much of your revenue depends on a small number of contractors. Good job costing, regular valuations and clear records of variations make this much more straightforward.

05Owner dependence and management

In many electrical businesses, the owner prices the work, manages the main customers, supervises quality and fills gaps on site. Buyers understand that — but they will want to see how the business could operate with less reliance on one person.

A contracts manager, an estimator, experienced supervisors and an organised office team all help. So does a track record of the business running well when you are not there.

06What due diligence is likely to cover

• Management accounts, adjusted earnings and the profitability of testing, maintenance and project work.
• Customer schedule, testing due dates and any customer or contractor concentration.
• Scheme registrations, assessment reports and the qualified supervisor arrangements.
• Open projects, work in progress, retentions, defects obligations and disputes.
• Test certificates and records, and how they are stored and retrieved.
• Health and safety documentation, insurance and claims history.
• Employee contracts, qualifications, vehicles and tools.

07Preparing your electrical contracting business for sale

• Report testing, maintenance, reactive and project revenue separately.
• Build a schedule of recurring testing customers and due dates.
• Make sure more than one person can act as qualified supervisor, if possible.
• Check how scheme registrations would be treated on a change of ownership.
• Resolve old retentions and disputes, and keep project reporting up to date.
• Hand over pricing and key customer relationships progressively.

08How Phixr looks at electrical contracting businesses

Phixr acquires and operates specialist field-service businesses for the long term. We are particularly interested in electrical businesses with strong compliance, testing and maintenance capabilities, capable teams and long-standing customer relationships.

Electrical compliance and testing sits within our Building & Life Safety sector, where you can read more about what we look for.

09Frequently asked questions

We do mostly installation work. Will buyers be interested?

Yes, although they will look closely at project risk, margins, customer concentration and work in progress. Businesses that combine installation with testing and maintenance often find it easier to show predictable revenue.

I’m the qualified supervisor for our scheme registration. What happens if I sell?

That is a common situation. Buyers will want to know how the role would be covered if you stepped back. Training or appointing another qualified supervisor before a sale can reduce that risk, and it is worth checking your scheme’s requirements.

Does our registration transfer to a new owner?

It depends on the scheme and the transaction. In a share sale the company usually continues, but you may need to notify the scheme of a change of ownership. In an asset sale the buyer may need its own registration. Check early rather than late.

Our periodic testing isn’t under contract. Does it still count as recurring?

It can. Buyers will look at the history — whether customers return for each inspection cycle and how consistently the work comes back. A clear record of due dates and repeat customers helps.

Do I need to be ready to sell before speaking to Phixr?

No. Many owners begin with a confidential conversation simply to understand their options.