How do I sell my electrical business in Texas?

What this usually means in a Texas electrical sale

When a buyer, SBA 7(a) lender, or private equity electrical platform evaluates a Texas electrical contracting company, they are not buying last year’s completed jobs—they are buying the cash flow that will repeat after your truck leaves the yard. Three Texas-specific diligence gates determine whether you receive a premium multiple paid in cash at closing or face a steep valuation discount and post-close holdbacks:

• TDLR Master Electrician License Continuity (Texas Occupations Code Chapter 1305): Under Texas Department of Licensing and Regulation (TDLR) rules, an Electrical Contractor license requires a designated Master Electrician of record who is an owner or full-time employee. Your personal Master Electrician license does not automatically transfer to a buyer. Putting a second licensed Master Electrician on your bench before going to market prevents the buyer from trapping a large slice of your purchase price in a license-contingency holdback (see Texas contractor license transfer rules).
• Valuation Multiples by Revenue Mix (2.4x–3.3x SDE vs. 3.5x–6.0x Adjusted EBITDA): Electrical shops heavily reliant on competitive general-contractor (GC) plan-and-spec bidding or residential new-construction rough-ins trade near the lower band (2.4x–3.3x SDE) because backlog must be re-won every 90 to 180 days. Shops with documented residential/commercial maintenance agreements, repeat industrial power/controls accounts, and a non-owner estimating team trade at 3.5x–6.0x Adjusted EBITDA.
• WIP Over/Under-Billing Normalization: In quality of earnings (QoE) diligence, buyers reconstruct monthly accrual percentage-of-completion schedules. Upfront mobilization draws and progress billings ahead of incurred labor and switchgear costs (Billings in Excess of Costs / over-billings) are treated as a working-capital liability or dollar-for-dollar deduction at close (read the Contractor WIP & Over/Under-Billing Diligence Guide).

Signs your shop will get discounted in diligence

• You hold the only TDLR Master Electrician license on the company registration and personally sign off on every commercial bid or switchgear takeoff.
• More than 15% of annual revenue comes from a single general contractor or property manager who calls your cell phone directly (see Customer Concentration Risk).
• Your QuickBooks P&L is kept on a cash or tax basis with job materials, customer deposits, and 10% commercial retainage booked when cash moves rather than as work is completed.
• Field foremen perform extra runs, panel upgrades, or rework on commercial jobs without signed written change orders before pulling wire.

What Texas electrical owners often try first

• Owners often sign a non-disclosure agreement or non-binding Letter of Intent (LOI) from an unsolicited roll-up buyer before checking how the working-capital peg and WIP true-up are defined (see the Unsolicited PE LOI Checklist).
• A common fallback is hiring a commission broker to list the shop immediately while the owner is still the sole qualifier and estimator.
• A common fallback is presenting unverified verbal add-backs for personal trucks, fuel cards, and family payroll that get disallowed during a Quality of Earnings (QoE) review.

What to check before talking to buyers or brokers

• Verify who will serve as the TDLR Master Electrician of record after closing and lock in a written retention bonus or qualifier agreement with your senior Master or Journeyman bench.
• Separate trailing 24-month revenue into recurring service/maintenance agreements, repeat T&M commercial accounts, and competitive lump-sum GC bids.
• Build a job-by-job WIP schedule showing contract value, approved change orders, costs to date, percent complete, earned revenue, billings to date, and over/under-billing balances.
• Document every owner add-back (excess owner compensation above a $130K–$175K replacement GM/Qualifier salary, personal vehicles, related-party shop rent) with 24 months of clean receipts.

Common false fixes

• Assuming a buyer’s headline multiple equals net cash at closing without modeling the Net Working Capital peg, equipment debt payoff, and IRS Form 8594 depreciation recapture on service trucks.
• Rushing into a 90-day exclusivity lockup with one buyer before your WIP schedule and job-cost margins tie cleanly to your bank statements.
• Paying a 8%–10% broker success fee when the real bottleneck is operational owner dependency and license continuity inside the shop.

How SweetSpot helps Texas electrical owners prepare (0% commission)

SweetSpot Business Advisors is an operator-led advisory firm, not a business broker. We never take listings or charge a percentage of your sale. Instead, we work for published fixed fees so you can prepare at your own pace: start with the free Sale Readiness Self-Assessment, order a custom $250 Sale Readiness Field Guide, commission a remote $2,500 Business System Inspection of your records, or book a confidential call to talk through your shop and timeline.