Any experience with rolling up Electricians?
March 21, 2021
by a searcher from Georgia Institute of Technology in Huntsville, AL, USA
Good evening all! I'm a relatively new searcher, having only thought about acquisition entrepreneurship about a month ago. I've been doing my legwork poking into various industries, trying to find something that feels like a good fit for me... and seems to be a good candidate for consolidation. I've decided on electricians.
That said, I was curious if there's anybody out there with advice. Items I'm concerned about:
* Licensure - Most of the firms I'm discovering are owner-operated with the license being carried by the owner. I'm worried that since I am not a professional electrician, this will hinder my ability to purchase.
* Location - To follow on the heels of the above: My secondary fear here is that licensure requirements are going to be variable from jurisdiction to jurisdiction (sometimes state, sometimes local from what I can read)... This leaves me concerned that even if I can find the right fit for one area, I'm not going to gain efficiency on successive purchases (basically, I'll need to do some heavy retention planning for any licensed professionals that aren't owners... in each location).
Does anybody have experience buying electricians (and would be willing to share some tips)?
Thanks!
-Jon
from Massachusetts Institute of Technology in Miami Beach, FL, USA
Re: licensure. I can only speak to Florida, but I've seen similarities with other states + I can give you some terms to look up. First, without an electrical contracting license, you'll need someone licensed to be associated with the business. In Florida, it's called a "qualifying agent." The typical strategy I've seen for home services businesses (electricians, HVAC, plumbers, etc.) is to have an employee who's not the seller be the the qualifying agent for at least a year, then have the new owner get licensed herself. Why an employee and not the owner? Because the SBA doesn't allow the seller to stay on as an essential employee post-acquisition; the seller may only consult and even that's limited to 12 months. Why at least a year? Because that's a typical timeframe for the amount of work experience needed for you, as the new owner, to be able to get one of these licenses after you pass an exam (usually, it's like 3-4+ years, but by owning the business and having a college degree, states may say you've had sufficient supervisory experience). Keep in mind, these are generalities, lookup your target states' licensing requirements!
Re: location & licensing. At least in Florida, where you operate and what you can do depends partially on whether you're a "certified electrical contractor" or a "registered electrical contractor." If you're certified, you can work anywhere in the state. If you're registered, you're restricted to a particular county or municipality. So if you're rolling up electrical contractors, you'd want to become a certified electrical contractor
One last point about electrical contractors: I've yet to find one where there's a focus on residential servicing. Most seem to either do new construction or servicing commercial properties for some odd niche (e.g. replacing lights in parking lots). Now, where I am in South Florida, there's tons of construction, so even the HVAC and plumbing companies I find tend to have small servicing arms relative to construction. But the electrical contractors have, thus far, had 0% residential servicing! I suppose that should've been unsurprising; I can't remind a time where I've needed an electrician in my adult life to fix something but I've definitely had plumbers and HVAC people. Home electrical systems, perhaps because they're mostly solid-state (no liquids or gases, unlike HVAC & plumbing), are very reliable!
from Georgetown University in Raleigh-Durham, Durham, North Carolina, USA