Residential Electrical Contractor - due diligence

April 14, 2025

by a searcher from The University of Chicago - Booth School of Business in Chicago, IL, USA

I am looking at an Electrical Contractor, mostly residential and focused on service, repairs, retrofits, upgrades. Would love insight from folks who operate, have acquired or submitted LOIs in this space. What are the big watch-outs, pitfalls and things to pay special attention to? Thanks!

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Reply by a professional
from Bentley College in Miami, FL, USA

Hey Jorge – you're asking all the right questions early, which is great. Here are a few things to zero in on during diligence: 1. Licensing & Permitting Make sure all electricians are properly licensed and the business holds any required state/local contractor licenses. Look for any history of violations or permit issues. 2. Customer Concentration & Source of Leads How reliant is the business on a few key customers or referral sources (e.g., property managers, home warranty companies)? A diversified lead funnel is more durable. 3. Labor Risk & Technician Retention Good electricians are hard to find and keep. Understand wage structure, benefits, how they recruit, and whether there's a strong foreman or ops lead who’ll stay post-close. 4. Pricing Discipline & Job Costing See if they track profitability by job or service line. Many small contractors lack solid cost accounting, which can hide margin erosion. 5. Warranty & Rework Risk Ask about call-backs, warranty claims, and how those are handled. High rework rates can kill efficiency and margins. If you’re assembling a diligence team, DueDilio can be a helpful resource. https://www.duedilio.com

Reply by a searcher
from University of Pennsylvania in San Francisco, CA, USA

^redacted‌ a friend of mine from electrical contracting space used https://vasl.team/mergers-acquisitions/ for due diligence and are still using them post acquisition - he was quite happy and so are we for the work we do with them. Happy to connect you with them as well

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