What Is My Electrical Contracting Business Worth

A buyer does not value an electrical contracting business by picking a multiple. A buyer starts with a view of what kind of business this is, how dependable its earnings are, and how much of it would still work if the owner stepped back. The multiple follows from those answers.

This article is written for electrical contractors turning over between £1m and £50m, and particularly for those earning between £1m and £5m of EBITDA, where trade buyers and private equity both take an interest. It sits alongside the guide to HVAC business valuation, which covers the same ground for heating and cooling firms.

What is an electrical contracting business worth in the UK?

No published UK index gives a valuation multiple for electrical contractors alone. The figures owners hear are drawn from broader data, and it helps to know what that data describes.

A widely quoted measure is BDO’s Private Company Price Index, which tracks the price paid for UK private companies as a multiple of earnings before interest, tax, depreciation and amortisation (EBITDA). It is published regularly, with separate figures for trade buyers and private equity buyers, and the current edition is the place to find current numbers.

The index needs reading with care. It is a median, drawn only from completed deals where enough financial information was disclosed, across every sector. Those deals include software and healthcare businesses that attract far higher prices than contracting, and they tend to be larger than many contracting sales. BDO describes the index as a guide, not an absolute measure of value, and notes that the multiples may be overstated because private company profits are often suppressed by owner-related expenses.

For an electrical contractor, the index is best understood as a view of the wider market, not a benchmark. Where a particular contractor falls in relation to it depends on the factors described in the rest of this article, and on what a specific buyer is prepared to pay at the time.

What it does confirm is the method. Value is adjusted profit multiplied by a figure that reflects risk and growth, then adjusted for debt, cash and working capital. The general formulas are set out in the guide on how to calculate business valuation. The rest of this article is about the inputs an owner can influence.

What kind of business is a buyer actually valuing?

Before a buyer chooses a multiple, the buyer decides which category the business belongs to. This single judgement moves the answer more than any negotiation.

An electrical contractor can look like one of three things. It can be a project installer, winning design-and-install packages from main contractors and developers. It can be a compliance and maintenance provider, earning most of its income from periodic inspection and testing, planned maintenance and reactive call-outs under term agreements. Or it can be an electrification specialist, with established capability in solar, battery storage and electric vehicle charging.

Many businesses are a blend, and the blend is what gets valued. A firm that earns the majority of its profit from projects will be compared with other project businesses, whatever else it does. The same engineers, vans and customers, with a larger and well-priced maintenance book, can be compared with a different and better-rated group.

This is why two contractors of the same size can receive offers that are far apart. They are not being measured against each other. They are being measured against different peer groups.

How do buyers arrive at the number?

A valuation moves through three steps. Each one is a place where the answer can rise or fall before any negotiation starts. The description here reflects common practice in UK private company sales. It is a convention, not a rule, and every deal is negotiated on its own terms.

Step	What the buyer does	What the owner controls
Adjusted EBITDA	Starts with reported profit and adjusts for owner pay that is above or below a market salary, one-off costs and personal expenses.	Whether every adjustment is documented and would survive scrutiny.
The multiple	Chooses a figure based on how predictable the earnings are and how much the business depends on particular people or customers.	The mix of work, the spread of customers and the strength of the management team.
Enterprise value to cash	Deducts debt, adds surplus cash and compares working capital with a normal level.	How retentions, work in progress and overdue invoices are managed and reported.

What is adjusted EBITDA, and why is it not the profit in the accounts?

Statutory accounts are prepared for tax and compliance. A buyer wants to know what the business would earn under new ownership, in a normal year. Adjusted EBITDA is the bridge between the two.

Adjustments run in both directions. Costs that will not recur are added back. Costs that the business has avoided, but a new owner would have to bear, are deducted. The groupings below are typical, not fixed.

• Often accepted: one-off legal or relocation costs, the owner’s personal expenses paid through the company, and remuneration clearly above a market rate for the role.
• Often challenged: losses on individual jobs described as exceptional, recruitment costs that occur most years, and savings that have been planned but not yet achieved.
• Often deducted: the cost of replacing an owner who is paid little or nothing for a full-time role, family members doing real jobs below a market wage, and under-investment in vehicles, test equipment or systems.

In contracting, loss-making jobs deserve particular attention. An owner may see one bad contract as an exception. A buyer who finds one in each of the last three years will treat it as part of how the business trades. The adjustments that hold are the ones supported by documents at the time, not by explanation afterwards.

How does the size of the business change the multiple?

Across the range from £1m to £50m of turnover, size changes what a buyer believes they are acquiring. The stages below are patterns that recur, not rules, and plenty of businesses sit outside them.

At the smaller end, the business and the owner are often hard to separate. The owner wins the work, prices it and manages the key customers. A buyer sees concentrated risk and prices it accordingly, often with part of the payment deferred or tied to future results.

In the middle of the range, a management layer has usually formed. There may be a contracts manager, an estimating function and a finance lead. The owner is still involved in many decisions, but the business has begun to run through roles. This is the point where preparation has the greatest effect, because the structure exists and needs proving.

At the upper end, with EBITDA of several million pounds, a full management team is normally in place and the buyer pool widens. BDO publishes its private equity figure separately from its trade figure, and the deals behind it are generally larger. A business of this size can be bought as a platform to which smaller firms are added, and platforms are valued for their systems and management as much as their earnings.

Size does not guarantee a better multiple. A £30m contractor that still depends on its founder for every major bid has the risk profile of a much smaller firm, with more at stake.

Why do similar electrical contractors get different multiples?

Once category and size are set, the remaining difference comes from how the business runs.

• The mix of work. Earnings from contracted testing, inspection and planned maintenance repeat each year. Earnings from project installation have to be won again. Predictable earnings are generally valued more highly.
• Customer concentration. When one or two main contractors or clients account for most of the revenue, the buyer is exposed to decisions made outside the business.
• Owner dependency. If the owner prices every job, holds every key relationship and resolves every problem, the buyer is paying for a person who is about to leave. This is the central theme of exit readiness.
• Management depth. Leaders who can run the business between them turn an owner’s job into a set of roles a buyer can keep.
• Quality of information. Monthly management accounts, margin by type of work and reliable job costing let a buyer verify the story quickly. Gaps slow the process and invite a lower offer.

Workforce is a further factor, and it is specific to this trade. Research led by JTL with industry partners, summarised by the Electrical Contractors’ Association, reports a long-term decline in the number of qualified electricians in England, with apprenticeship starts running below the level the research says is needed. Where skilled people are scarce, a business that trains and keeps its own holds something buyers find hard to build.

What does a worked example look like?

Consider an electrical contractor turning over £12m and reporting EBITDA of £1.5m. The figures are invented to show the arithmetic. They are not market data, and no multiple is suggested.

The owner believes £300,000 of costs should be added back, giving £1.8m. The buyer accepts £100,000 of those, and deducts £150,000 for a managing director to replace the owner. Adjusted EBITDA is £1.45m.

Item	Amount
Reported EBITDA	£1.5m
Owner’s view after add-backs	£1.8m
Buyer’s adjusted EBITDA	£1.45m
Gap between the two views	£0.35m
Effect of that gap on price, for each turn of the multiple	£0.35m
Effect of one extra turn of the multiple on adjusted EBITDA	£1.45m
Effect of a £0.3m working capital shortfall	£0.3m off the price

Three things follow. Every pound of profit a buyer does not accept is multiplied when the price is set. A change in how the buyer categorises the business, worth one turn of the multiple, moves the price by a full year of adjusted profit. And working capital comes off pound for pound, after the multiple has been applied. None of these is fixed. Each responds to how the business is run before a sale.

How does enterprise value become cash at completion?

Enterprise value is the price of the business free of debt and cash. What the owner receives is the equity value, after three adjustments. The mechanics vary by deal and are set out in the sale agreement.

Debt is deducted. Buyers define debt broadly, to include bank loans, hire purchase on vehicles, overdue tax and, in some cases, deferred income for work not yet carried out. Surplus cash is added, but only cash the business does not need to trade.

Working capital is where many contractors are exposed. The buyer sets a normal level, often an average over a recent period, and adjusts the price pound for pound if the business is delivered with less. Retentions held by customers, applications for payment not yet certified and work completed but not invoiced all sit inside that calculation. A business that lets retentions age, or books work in progress optimistically, will find the discussion difficult.

The structure of the payment matters as much as the headline. Part of the price may be deferred, or made conditional on results after completion. The more the business depends on the owner, the more a buyer will want to hold back.

Who buys electrical contracting businesses?

The type of buyer affects both the price and what happens afterwards.

• Trade buyers are other contractors or larger groups adding geography, capability or customers. They know the work and will look closely at people and contracts.
• Private equity-backed groups buy a larger business as a platform and add smaller firms to it. They value management, reporting and repeatable processes, because the plan depends on integration.
• The management team may buy the business, often with outside funding. This suits owners who want continuity, and it requires a team able to run the business already.
• An employee ownership trust buys the business on behalf of its employees, usually paying the owner over time from future profits. HMRC’s guidance sets out the conditions and the tax treatment, which has changed over time.

The market these buyers operate in is fragmented. Reporting by BESA, the trade body for building engineering services, on the largest mechanical and electrical contractors describes a sector in which the biggest firms account for a minority of the work, with the remainder spread across many smaller businesses. That reporting covers mechanical and electrical work together, not electrical contracting alone, but the condition it describes is the one that encourages consolidation.

What is changing in the market for electrical contractors?

Two conditions shape the market an owner would be selling into, and both change over time.

The first is the level of deal activity. The number of transactions rises and falls with interest rates and confidence, and Experian’s reviews of UK deal activity record the movement, including for construction. When activity is lower, buyers can be more selective and well-prepared businesses stand out. When it is higher, more businesses find a buyer, but preparation still affects the price.

The second is public support for electrification. Government programmes such as the Warm Homes Plan and the Boiler Upgrade Scheme fund solar panels, batteries and low-carbon heating, and building regulations shape what is installed in new homes. For an electrical contractor with solar, battery storage or electric vehicle charging capability, this can support a growth story that a buyer is able to check against public commitments.

Buyers also weigh the risks. Much of this funding is aimed at homes, so a contractor working mainly for commercial customers may see little of it. Schemes are revised or withdrawn, margins on grant-funded work can be thin, and demand that depends on one programme is less secure than demand spread across several. Capability that also serves customers who are not relying on a grant carries more weight.

When does preparation need to start?

Preparation tends to take longer than owners expect. A buyer assesses the business on its track record, so a change made this year has to appear in the accounts before it is believed. Moving customer relationships to the team, building contracted revenue and tidying working capital all take more than one financial year to show.

Timing also affects what the owner keeps. Reliefs such as Business Asset Disposal Relief can reduce the Capital Gains Tax on a sale, subject to qualifying conditions and a lifetime limit, and the rates have changed over time. This article does not cover tax, and the position depends on individual circumstances. The wider sequence of preparation is covered in the article on business sale preparation.

What tends to increase value before a sale?

The changes that affect value are practical, and none involves winning more jobs. The following are commonly seen in businesses that sell well.

• The way work is priced, won, scheduled and invoiced is written down, so the method belongs to the business.
• More than one person is involved in every important customer relationship.
• Repeat customers are on contracted testing and maintenance agreements where the work allows.
• Monthly management accounts show margin by type of work.
• Retentions and work in progress are reported separately and chased on a routine.
• No single customer accounts for a dominant share of revenue.
• Adjustments to profit are recorded as they arise, with supporting documents.

In a smaller business these changes often concern the owner’s own role. In a larger one they concern whether the management team has real authority, and whether reporting would satisfy an institutional buyer. Some owners make the changes with their existing team. Others bring in outside support, such as a fractional COO for electrical contractors, or start with business valuation services to establish where the business stands today. This article is general information about how valuations work. It is not financial, tax or legal advice.

Frequently asked questions

How many times profit is an electrical contracting business worth?

There is no published UK multiple for electrical contractors alone. Indices such as BDO’s cover private company deals across all sectors and are best read as a guide to the wider market. Where an individual contractor sits depends on how predictable its earnings are, how much it relies on its owner and what a particular buyer is seeking.

Do maintenance and testing contracts increase the value?

Generally, where they are documented and renew reliably. Contracted work makes earnings more predictable, and a substantial maintenance book can change the group of businesses a buyer compares the firm with.

Is turnover or profit used to value the business?

Profit, in the form of adjusted EBITDA. Turnover indicates scale, but two contractors with the same turnover can have very different earnings and very different values.

Does a larger business always achieve a higher multiple?

No. Larger businesses attract more buyers, including private equity, but only where a management team runs the business. A large contractor that depends on its founder carries the same risk as a small one.

How do retentions affect the price?

Retentions form part of working capital. If the business is handed over with less working capital than its normal level, the price is reduced by the difference. Old or disputed retentions may be discounted or excluded.

Does solar, battery or EV charging work make the business more attractive?

It can. It gives a buyer evidence of growth supported by public funding. The effect is stronger when the capability is established, profitable and not reliant on a single scheme.

Sources

• BDO: Private Company Price Index and index report, first quarter 2024 (method and notes)
• Experian: UK and Republic of Ireland M&A Review
• BESA: Top 30 firms still optimistic despite economic turmoil
• Electrical Contractors’ Association: ECA welcomes reports on skills gap and investment returns on apprenticeships
• UK Parliament, Hansard: Written statements, 21 January 2026 (Warm Homes Plan)
• GOV.UK: Business Asset Disposal Relief
• HMRC: Capital Gains Manual, employee-ownership trusts