What an Electrical Contracting Business Is Really Worth (and What Moves the Number)

You run three to five crews, about $1.6M in revenue and roughly $330K in seller's discretionary earnings. Someone told you electrical sells for a high multiple, so you have quietly been running $2M-plus of math in your head.

That math is wrong, and the reason it is wrong is the same reason your business is worth less than you think. The master license the company operates under is in your name, and the commercial relationships are yours.

The short version

• An owner-dependent service business transacts near 1.65x SDE; an owner-light one near 3.5x. On a $300,000-SDE business, that spread is $555,000.
• The high multiple you have seen quoted is an EBITDA multiple for a PE platform roll-up, not the SDE multiple a one-to-five-crew owner sells at.
• A $500K-$2M owner-operated electrical business lands at a low-single-digit SDE multiple, set by the canon Service-bucket range.
• The most expensive owner-dependence in electrical is the master license the business may legally hinge on, plus whoever holds the commercial relationships.
• 86% of owners have no professional valuation or only a rough estimate, so most are anchored to the wrong number.

Below: the real SDE number, why the platform multiple isn't yours, and the decisions that move it.

What an electrical contracting business is actually worth

An electrical contracting business is worth a multiple of its seller's discretionary earnings, and for an owner-operator that multiple is low single digits, not the high multiple quoted on broker pages. Electrical maps to the Service business-type bucket, where the SDE multiple runs about 2.4 to 3.2 times at $250K-$500K SDE and 2.9 to 3.9 times at $500K-$1M.

The all-industry median sits near 2.0 to 2.5 times SDE. The high multiple you saw is an EBITDA figure for a different kind of buyer.

Those ranges are SDE multiples drawn from a decade of closed transactions, not list prices. They are the Main Street number a working owner actually closes at.

Run the math on the $330K SDE the lead operator carries. At the $250K-$500K band that is roughly $792K to $1.06M, not the $2M-plus the platform framing implied.

The reason the broker number felt close is that it is a real number for a real buyer, just not for this seller. A PE roll-up does pay multiples that high, which is what makes the confusion so durable.

Here is the full canon Service-bucket range by SDE band, the same table the diagnostic uses:

• Under $100K SDE: 1.3 to 2.3 times
• $100K to $250K SDE: 1.9 to 2.5 times
• $250K to $500K SDE: 2.4 to 3.2 times
• $500K to $1M SDE: 2.9 to 3.9 times
• $1M-plus SDE: 3.5 to 4.5 times

Those bands are the Service-bucket canon, calibrated across a decade of closed transactions. Electrical sits inside that bucket, and the band is the honest starting point for an electrical shop's number.

The deeper math behind that band, and where your specific number lands, is the work of the full electrical business valuation walkthrough. Start there for the multiple itself.

The number you've seen quoted is an EBITDA platform number

The high multiple is real, but it is not yours. It describes two different worlds, and the gap between them is the whole point.

Platform world. A private-equity firm rolls up dozens of electrical companies into one consolidated entity, prices it on EBITDA, and pays a high multiple because it is buying scale, management depth, and a portfolio that no single owner anchors.

Owner-operator world. A buyer or successor purchases your one-to-five-crew business, prices it on SDE because your earnings include your own pay and add-backs, and pays a low-single-digit multiple because the business still depends on you.

EBITDA strips out the owner's compensation and assumes a management layer is already in place. SDE adds the owner's pay back in, because the buyer has to replace you.

That single accounting difference is what splits the two numbers. The same business looks like a high multiple to a broker and a low one to the person writing the check.

There is a second reason the platform multiple is higher, and it is the one that matters to you. The roll-up is buying a company that already runs without any one owner; you are selling a company that still runs on you.

A platform pays up because the management risk is already solved across its portfolio. An owner-operator buyer pays down because that risk is the first thing they have to solve after closing.

That is why the SDE-versus-EBITDA gap is not just accounting. It is a direct readout of how much of the business still sits on the owner.

The independence discount behind that number sits behind every trade's number, not just electrical. See what every trade is really worth for the cross-trade view.

The clean way to see the conversion, line by line, is the SDE-versus-EBITDA method. It shows exactly where the platform number and your number split apart.

The decisions that move the number

Your sale price is not fixed by your trade or your revenue. It is set by decisions you control, and each one moves you along the 1.65x-to-3.5x spread.

Each decision below routes to the deep method for it. Read the one that matches where you are.

• Decision 1, whose license the business runs on, is the single most expensive owner-dependence in electrical, the qualifying master license the company may legally hinge on. Making that license arrangement survive your exit is what closes the discount, the work of selling an electrical business for more than the owner-dependence discount.
• Decision 2, whether the business runs without your license on site, is what a buyer pays the higher multiple for. The reliability methods that take you off the job live in running an electrical business without your license on every site and produce a business that runs without you, built on the way you run your business like a system.
• Decision 3, the manager you hire around the master role, is how your authority on the work stops being yours alone. That hire is covered in hiring an electrical business manager around the qualifier role.
• Decision 4, the clean SDE story a buyer can trust, means add-backs and books that hold up under scrutiny. The method for building that defensible number is how to value a small business the way a buyer will.
• Decision 5, the buyer's pre-bid read of the same numbers, is these exact levers run in reverse, with the license arrangement as the first diligence flag. The buyer's side is the pre-bid analysis of an electrical deal.

Why the master license decides most of it

Of the decisions above, one carries more of your number than the rest. It is the master license the business operates under, and whoever holds the commercial relationships sits right next to it.

Two things make this the most expensive owner-dependence in electrical. The business may legally hinge on your qualifying license, and the commercial relationships that feed the work are personal to you.

A buyer looks at both and sees risk they cannot transfer. The license is not just a credential; it is the legal permission the company needs to operate.

That is why license transferability is the first thing a buyer or successor must solve. A business that cannot pull permits the day after you leave is not a business a buyer can finance.

The recurring side of the book matters too, and the direction is clear. Commercial service contracts lift the recurring book and the multiple; pure project and new-construction work is lumpier and harder to price.

A license arrangement that survives your exit, paired with commercial relationships a second person holds, is worth more than the same revenue running through you alone. That conversion is the difference between the low end of the band and the high end.

Picture the buyer's first question on your license. They are not asking what work you can do; they are asking who is legally qualified to run this company once you are gone.

This is why the license is the lever, not a footnote. Solve the transfer and you move the multiple; leave it personal and you cap it, no matter how strong the revenue looks.

Where an electrical deal sits with a lender

A buyer usually borrows to close, which means the lender's read of your trade quietly shapes what a buyer can pay. The broker page never shows this, but it works in electrical's favor.

Electrical maps to the Service bucket, and Service sits at the low-risk end of the SBA charge-off ordering. Professional Services and Service anchor the low end of realized SBA charge-offs; Food Service and Retail anchor the high end.

A lower-risk trade is one a lender finances with less friction, which means a buyer can support a stronger offer.

This is a confidence read, not a discount. The risk tier never lowers your estimated value; it tells a buyer the financing is more likely to clear, which is one less reason for them to bid low.

How to find your real number

The decisions are owner-controlled and rankable, which means your real number is knowable today, not on the day a broker shows up. The question is where this specific business sits on the 1.65x-to-3.5x spread.

That is what the free Keystone diagnostic measures. It scores how much of the business still runs on you and returns an estimated sale price calibrated against 10 years of BizBuySell Insight Reports and 1.6M-plus SBA 7(a) loan records.

The seller-prep method behind closing the discount, decision by decision, is laid out in preparing your business to sell. The diagnostic shows you where you stand before you start.

Get your three scores and an estimated sale price, free, at app.trykeystone.io. It is four minutes and it tells you which decision is costing you the most.

If you are not ready to run it, the newsletter covers the exit math and operating mechanics that move the number, one issue at a time.

FAQ

What multiple do electrical businesses sell for?

An owner-operated electrical business in the $500K-$2M range sells at a low-single-digit multiple of seller's discretionary earnings, roughly 2.4 to 3.2 times at $250K-$500K SDE and 2.9 to 3.9 times at $500K-$1M. The high multiple you may have seen quoted is an EBITDA multiple for platform roll-ups, not the owner-operator's number.

How do you value an electrical contracting company?

You apply an SDE multiple from the Service bucket to the business's seller's discretionary earnings, landing low or high in the band based on owner-independence, license transferability, and clean financials. SDE includes the owner's pay, which is why it differs from the EBITDA multiple brokers quote.

What makes an electrical business worth more?

A qualifying license arrangement that survives the owner's exit and commercial relationships a second person can hold, rather than a master license and a contract book that live only with the owner. Owner-light electrical businesses transact near 3.5x SDE and owner-dependent ones near 1.65x, a $555,000 spread on a $300,000-SDE business.

Can you sell an electrical business if the license is in the owner's name?

You can, but the license transfer is the first thing a buyer or successor has to solve, because the business may legally hinge on it. A business that keeps the qualifying license available after the owner leaves clears that risk, which is what lifts the multiple toward the higher end of the band.