Electrical Business Valuation by Revenue Size (2026)
Take what the business pays you, add back the costs a buyer would not carry, then multiply. Under $1M in revenue that multiple is 2.5 to 4.5. From $3M to $10M it is 5.5 to 8.
Three things go wrong before the multiplying starts:
- Owners use the profit on their tax return. That number is not what buyers multiply, and it is far too low.
- They pick the wrong earnings method for their size. The two methods differ by a manager’s whole salary.
- They claim add-backs they cannot evidence. Anything you cannot show on a statement comes straight back out.
Start With the Right Earnings Number
Buyers never multiply revenue, and they never multiply the profit line on your tax return either.
Below about $1M in revenue they use everything the business pays you: your wage, your benefits, and the personal costs it carries.
Above roughly $3M they use profit after paying someone to do your job. A manager’s salary comes out before the multiplying starts.
- Between $1M and $3M, either can apply. It depends on whether you still run jobs yourself or have a foreman doing it.
- The gap between the two is a whole salary. On a shop clearing $400,000, hiring in at $120,000 changes the base by 30%.
- Bigger is not automatically better. The second method uses a lower base but attracts a much higher multiple.
What Each Tier Is Worth, Worked Through
The earnings column below is an illustration, not a benchmark. Your own figure is the one that matters, and it varies hugely by work mix.
| Yearly revenue | Example earnings | Multiple used | Example price |
|---|---|---|---|
| Under $1 million | $180,000 to the owner | 3.5x | $630,000 |
| $1M to $3M | $320,000 to the owner | 5.0x | $1.6 million |
| $3M to $10M | $700,000 after a manager | 6.5x | $4.55 million |
| $10M to $25M | $1.8M after a manager | 9.0x | $16.2 million |
| $25 million or more | $3.5M after a manager | 11.0x | $38.5 million |
Every multiple above sits inside the published band for its tier. The full ranges are in our guide to electrical sale multiples.
Add-Backs, and Which Ones Survive
An add-back is a cost in your accounts that a new owner would not carry. Each one you can prove raises the number that gets multiplied.
- Your own pay and benefits. Always added back on the smaller method, and replaced by a market wage on the larger one.
- Personal vehicles and phones run through the business, if you can point at the line.
- A family member on payroll who does not work the hours.
- One-time costs that will not repeat: a legal bill, a bad debt write-off, a flooded yard.
- Not your van fleet. Buyers expect to replace trucks, so depreciation on working vehicles rarely comes back.
Every added-back dollar is multiplied. At 5 times, finding $30,000 of evidenced add-backs is worth $150,000 at closing.
The test is always the same. If a buyer’s accountant cannot trace it to a statement, it does not count.
What Moves You Into the Next Tier
Moving up a row is worth more than squeezing a better multiple inside your current one.
- Hire the manager. It cuts your earnings base and raises your multiple, and above $3M the second effect wins.
- Put work under contract. Service agreements are the single most durable lever at any size.
- Add commercial or industrial work. It gives a buyer backlog they can forecast.
- Clean up three years of books before anyone asks. Messy records cost more than any of the above earn.
Crossing $5 million in price matters too. Below it an individual can borrow through the government-backed loan program, and above it your buyers change entirely.
Investor-backed platforms versus local strategic buyers is where that difference shows up in the offer.
Sanity-Check Whatever Number You Get
Whatever number you land on, hold it against the wider market before you believe it.
- Prepared sellers get most of their asking price. Across all trades they achieved 87% of benchmark or better in early 2026.
- The all-industry average is 2.7 times cash flow, per 2026 market data. Electrical sits above that, and you should be able to say why.
- The tier bands come from deal data, in a 2026 review of electrical contractor sales.
For the process rather than the arithmetic, see what your business is worth.
Frequently Asked Questions
Start with what the business pays you, add back costs a new owner would not carry, then multiply by the band for your revenue. Under $1 million that band is 2.5 to 4.5 times.
Profit, always. Revenue only decides which method and which band apply. A $900,000 shop and a $900,000 shop with half the earnings are worth very different amounts.
One adds back everything the business pays you, including your wage. The other subtracts what a manager would cost to do your job. Small shops use the first, companies above about $3 million use the second.
Your own pay and benefits, personal vehicles and phones run through the books, a family member not working the hours, and genuine one-time costs. Anything you cannot trace to a statement gets rejected.
It gets multiplied like everything else. At 5 times, $30,000 of evidenced add-backs adds $150,000 to the price. That is why the paperwork is worth the evening it takes.
Above about $3 million in revenue, usually yes. It lowers the earnings base by a salary but moves you to a much higher multiple, and the second effect wins. Below that it often does not pay.
Next Steps
- Pull last year’s accounts and find the profit line. That is your starting point, not your answer.
- List every add-back you can evidence, and total it.
- Pick your method by revenue, then multiply by the band for your tier.
- Set your date. Selling takes six to nine months, plus a year of getting ready.
- Work out what you keep. Asset sale or company sale, and how each is taxed.
- Get a free valuation and buyer introductions. No fee, no exclusive, no obligation to sell.