Selling a switchgear service and install business
Why the installed base is worth more than the order book, what buyers pay a premium for, and the engineer scarcity that protects the whole sector.
Switchgear service and install prices above general electrical contracting, and above switchgear manufacture in most cases. The reason is straightforward once you see it: every panel you install becomes a maintenance obligation lasting decades.
An owner who thinks of the business as an installation contractor with a service department attached is undervaluing it. A buyer sees the reverse.
The installed base is the asset
Illustrative revenue mix for a £20m switchgear service and install business.
Why the installed base matters more than the order book
Switchgear has a service life measured in decades and a statutory and insurance driven requirement to be maintained, tested and kept safe throughout. The organisation that installed it is usually best placed to service it, holds the drawings and the settings, and knows the site.
That produces something rare in electrical contracting: an income stream that renews without being won again, attached to physical assets that cannot easily be serviced by someone else.
Then, as that equipment ages, the same relationship produces retrofit and upgrade work. Obsolescence is not a threat in this sector, it is a revenue line, and businesses that can retrofit and extend the life of ageing installations rather than only replacing them earn better margins and stickier relationships.
What proportion of your revenue comes from equipment you installed? Most owners have never counted it. It is the number that sets your multiple.
Get a free valuationWhat it is worth
| Turnover | Typical adjusted EBITDA | Indicative enterprise value | Who is likely to buy |
|---|---|---|---|
| £10m | £0.8m to £1.5m | £3m to £7.5m | Regional electrical contractor, management buyout |
| £25m | £2.0m to £3.8m | £9m to £23m | Electrical infrastructure group, platform bolt on |
| £50m | £4.0m to £7.5m | £20m to £53m | Private equity platform, manufacturer buying service |
| £150m | £12m to £22m | £66m to £176m | Infrastructure groups, international entrants |
Guide only. The spread inside any one row is wider than the spread between rows.
What changes as you scale
Indicative. Turnover is a proxy, the size of the earnings is what moves the multiple.
What buyers pay a premium for
HV capability and authorised persons
High voltage work requires competence that takes years to build and authorisation that individuals hold. A business with depth in HV authorised persons and protection and control engineers has something a buyer cannot recruit their way into, because almost nobody can.
Protection, control and testing
Secondary injection testing, relay setting, protection studies. Genuinely scarce skills, high margin, and the work that sits closest to the client’s risk. It also tends to open the door to everything else on the site.
Manufacturer approvals
Approval to work on specific manufacturers’ equipment, hold spares and maintain warranty. It restricts who can compete for the installed base and is worth real money. It is also a dependency, which is covered below.
Spares, obsolescence and drawings
Holding the records, the settings and access to obsolete parts for equipment nobody else supports. It is unglamorous and it is the reason clients cannot easily move.
What drags the number down
1. Engineers, and how few of them there are
The binding constraint on this entire sector. If your HV authorisations and protection capability rest on two or three individuals, a buyer is underwriting those people staying, and they will price it accordingly. Apprentices coming through are worth more here than in almost any other trade.
2. A manufacturer relationship you do not control
Approvals can be withdrawn, territories reassigned, and manufacturers occasionally decide to service their own installed base. A business whose access to the installed base depends on one approval carries a risk a buyer will want reflected in the structure, often through deferred consideration.
3. Installation heavy revenue mix
If most of the turnover is new panels with little service attached, you are an electrical contractor with a specialism, priced accordingly.
4. Maintenance that is not actually contracted
Many businesses in this sector service a large installed base on repeat purchase orders rather than contracts. It feels recurring and it is not, and a buyer will discount it against genuinely contracted income. Converting it is one of the highest value things available.
5. Client concentration in industrial sites
Large industrial, data centre and utility clients can each represent a substantial share of revenue. The relationships are sticky, but a single site decision can remove a large block of income.
6. Working capital in long lead equipment
Switchgear lead times are long and the cash is committed well before the job completes. Buyers set the working capital level accordingly.
Most of the installed base on purchase orders rather than contracts? That is a fixable gap, and it is worth more than anything else on this list.
Get a free valuationWho is buying
Electrical infrastructure groups adding service capability to an installation business, or geography to an existing service footprint.
Private equity platforms consolidating electrical services, drawn by the recurring maintenance income and the engineer scarcity that protects it.
Manufacturers buying service and install capability so they can reach their own installed base directly rather than through third parties.
Utility and infrastructure groups where the work touches substations, networks and grid connections.
International entrants, for whom the engineering competence is the entry barrier and acquisition is the only quick route past it.
What to fix, and how long it takes
- Report revenue by installed base. How much comes from equipment you put in. Weeks, and it reframes the whole conversation
- Convert purchase order maintenance to contracts. Six to eighteen months, and it is the highest value change available
- Build authorisation depth. More than two or three people holding HV competence. Twelve to twenty four months, and it is slow because the training is
- Document drawings, settings and asset registers for the installed base. Months, and it is what makes the annuity defensible
- Broaden manufacturer approvals. Twelve months, and it reduces the single biggest structural risk
- Grow retrofit as a service line rather than treating it as replacement work. Twelve to twenty four months
The process
- Valuation and analysis of the installed base, with contracted and uncontracted service income separated.
- A market test through our 30 day market test.
- Approaching buyers, on and off market.
- Offers and heads of terms.
- Diligence. Authorisation records, manufacturer approvals, the service contract base, engineer retention and the asset register behind the installed base.
- Completion and handover.
Where to start
With the split between installation and installed base income, and within that between contracted and uncontracted service. Our adjusted EBITDA calculator gets the earnings right first, and adjacent ranges are on the multiples by sector page.
Answered.
What multiple does a switchgear service business sell for?
Indicatively five to seven times adjusted EBITDA for a business of reasonable size, above general electrical contracting. HV capability and depth in protection and control sit at the top of the range. An installation heavy mix with little contracted service sits at the bottom.
Why does the installed base matter so much?
Switchgear has a service life measured in decades with a statutory and insurance driven requirement to maintain and test it. The organisation that installed it holds the drawings and settings and is best placed to service it, which produces recurring income attached to physical assets that cannot easily be serviced by anyone else.
Is obsolescence a risk to the business?
It is usually a revenue line rather than a risk. Ageing equipment generates retrofit, upgrade and life extension work at better margins than new installation, and businesses that can support obsolete equipment hold relationships that competitors cannot take.
What is the biggest single thing I can fix?
Converting maintenance that runs on repeat purchase orders into actual contracts. It feels recurring either way, but a buyer discounts uncontracted income substantially, and the conversion usually takes six to eighteen months.
Find out what it is worth
A free valuation with your installed base income separated from installation, and contracted service separated from repeat orders. Costs nothing.
Get a free valuation