Located in Western Michigan, this 50+-year-old company has transformed itself into a local powerhouse by diversifying its service offerings and garnering key longstanding relationships with the area’s most prestigious and largest employers, including manufacturing companies, hospital systems, schools, beverage companies, and retail big box stores.
Its list of services includes fiber optics, machine automation, commercial and industrial lighting design, retrofitting for energy savings, installation of fire alarm systems, CCTV and card access systems, industrial machine start-up, troubleshooting, and repair in addition to typical electrical services. 80% of the Company’s work is privately negotiated.
The Company retains a strong management team and a younger generation that has been willing to step up into leadership roles as the current owners have gradually transitioned towards retirement.
A large part of the Company’s success can be attributed to its employee-focused culture. The Company invests in hiring good employees with diverse career backgrounds. The Company trains them and allows them to grow, which in turn, results in superior customer service and satisfaction and, ultimately, growth and profitability.
The Company has been a proud member of an electrical workers union for several years, and it has served them well. This relationship is expected to continue.
Buyers will be required to have a minimum of $400,000, solid credit, and preferably industry experience to qualify for SBA 7a financing.
Real Estate: The owners own the Company’s facility, and they would like to sell the building.
Total Building Size: The total building area is about 8,000 square feet located on one acre of land. Two structures are located on-site. The smaller structure, of roughly 2,500 square feet, was constructed in 1989 and is used as an office and storage. The larger structure, of approximately 5,500 square feet, was built in 2002 and is used as a warehouse for electrical supplies and vehicle storage.
Number of Employees: 45 employees
Year Established: 1969
Facilities: The owners own the Company’s facility (8,000 square feet).
Support/Training: Ownership is willing to provide reasonable and customary transition assistance.
Reasons for Selling: Both owners would like to retire and spend more time with their families.
(1) Well-Established and Long-Standing Reputation: The Company has been in business for over 50 years, and the current owners have continued its operation with vital support from a dedicated, knowledgeable, and hardworking support staff. The Company has a fantastic story of growth over the 50 years. What began in 1969 as a 1-man shop, presently employs 45 workers. That makes the Company one of the largest and oldest electrical contractors in Southwest Michigan. The Company also has a fleet of 25 vehicles, further solidifying the Company’s outreach, reputation, and presence. The Company’s customers over the years include hospitals, casinos, Fortune 500 companies, factories, food processors, big box stores, restaurants, tool and die shops, and many more.
(2) Stable and Experienced Workforce with Diverse Backgrounds and Licenses: The Company has 45 total employees, including 10 electricians with their Master Electrician License, that could be converted to a Contractor License. Plus, the Company’s three key managers have been with the Company for a combined 52 years. The Company hires employees with expertise in diversified fields such as food processing, die casting, and plastic injection. All employees are provided the freedom and training to grow, investigate the latest technology, and attend seminars that help the Company meet the industry’s changing demands.
(3) Extensive Electrical Services and Customer Portfolio: The Company offers a diverse electrical services portfolio that focuses on commercial, industrial, and institutional work. Most electrical contractors will specialize or focus on a specific type of work (residential, commercial, or industrial); however, the Company has the experience, workforce, and reputation for servicing its customers’ varying needs. The Company’s services include new construction, design & build, rewire or remodel, general building maintenance, preventative maintenance, control panel assembly, machine maintenance & troubleshooting, machine control programming, and many more. This diverse service offering has attracted many substantial and well-recognized customers.
(4) Local Referral Network and Private Negotiated Bid Work: The Company does not spend time or money marketing or advertising; instead, the Company relies on its local network and reputation to produce new customers through word of mouth or referrals. The Company does not travel much more than an hour in each direction outside of its home base. The Union sends out notices for jobs to bid on, and the Company will submit bids for jobs. However, 80% of the Company’s projects and jobs are privately negotiated with repeat and return customers. The Company must be competitive with its prices, but this allows the Company to be confident in winning jobs without much competition and build stronger relationships with some of the most reputable customers in the area.
(1) Build an Inside/Outside Sales Team and Strategy: The Company has generated its revenue and sales exclusively through word of mouth and referrals. While this has proven to be an effective and lucrative way to grow the Business and create a strong reputation throughout the Midwest, the Company could benefit significantly by developing an internal sales force with commissioned salespeople or sales representatives that could call on commercial, industrial, and hospital organizations to ensure that the Company is on the bid invite lists. The Company could also generate substantial opportunities through a couple outside salespeople knocking on customers’ doors and setting up face-to-face meetings.
(2) Create a Marketing Plan and Upgrade the Website: Not only does the Company not have a salesforce, but the Company spends close to zero dollars on marketing each year. The Company has not upgraded its website in 15+ years, which can be seen as a downside, especially with how many customers look for the Company’s website to be appealing, eye-catching, informative, and detailed. There is perhaps a significant opportunity to upgrade the website, optimize it for Google, or pay for Google Adwords to bring in additional leads.
(3) Take advantage of the LED Lighting Replacement Trend in Businesses: LED lighting is a hot topic with most businesses because it is an inexpensive solution to cut long-term costs and a better light solution for most commercial/industrial spaces and offices. Many of the Company’s current customers need lighting upgrades, and there are lots of energy-saving projects with utility co-rebates. This is an excellent opportunity for the Company to focus heavily on its existing customers to help switch out the present energy-draining and more expensive light solutions.
(4) Implement Management Training for Electricians: The Company has a plethora of experienced and professional electricians that can complete a variety of electrical services. As a member of a Union, the apprentices attend classes at a local college, working toward their degrees. This classroom experience complements the extensive on-the-job training apprentices receive while working alongside experienced journeyman; however, none of the electricians are training in management. Most electricians are moved into project management in an office setting or shifted to a superintendent position. The Company does not offer a management training program, but the owners believe that this could help the Company grow and transform many of the current electricians into successful and independent project managers and superintendents. This could allow the Company to add additional apprentices and take on more substantial projects and workload.
(5) Robust Pipeline and Work-In-Progress Activity: Even though most companies were affected by COVID-19 and the environmental and economic conditions that transpired, the Company has developed a robust pipeline and is actively working through many of its projects. The Company has a total contract price of $8.0M, of which the Company has earned $6.15M of revenue and $350K in profit, with the potential to earn approximately a total of $630K in profit for the work in progress (WIP) activity as of May 31, 2020. Both owners are encouraged by the Company’s WIP activity and the customers that have approached them, providing the Company with commercial, industrial, and hospital projects – allowing the Company to replicate a routine financial year of $8M in revenue.
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*Special Note: In a victory for small business buyers, the recent $900BB stimulus bill directs the SBA to waive all guaranty fees and pay up to the first 3 months of new SBA 7(a) loans approved between February 1 and September 30, 2021 (up to $9,000/month). Our advice: Don’t wait. Find a quality business and get moving quickly. Banks will be busy this year and buyers that wait until July/August will likely lose out.