How Much Is an Electrical Business Worth in Australia?
An electrical contracting business in Australia is typically worth between 2x and 3.5x its annual EBITDA (earnings before interest, tax, depreciation, and amortisation). For a small owner-operator business generating $80,000–$120,000 in annual profit, that puts the value somewhere between $160,000 and $420,000. For a larger business with multiple licensed electricians, $300,000+ in EBITDA, and a commercial contract book that doesn't rely on the owner to keep it running — you're looking at $900,000 to $1.2 million or more. The exact multiple depends on a handful of factors that most sellers don't fully understand and most buyers don't know to ask about.
This guide breaks down how electrical business valuations actually work in Australia, what moves the multiple up or down, and what to watch for when someone puts a number on a business and calls it the asking price.
The EBITDA Multiple: What It Is and Why It Matters
Electrical businesses are valued on a multiple of their normalised EBITDA. Not revenue. Not turnover. Not what the owner takes home after paying themselves a salary that would make a sparkie laugh.
Normalised EBITDA means adjusted earnings — what the business actually makes after you strip out personal expenses the owner has run through the business, one-off costs that won't recur, and an owner salary that reflects what you'd need to pay someone to replace them. Most small trades businesses have some version of this to unpack.
The ATO's small business benchmarks for electrical services show that cost of sales typically runs at 40–55% of revenue, and total expenses at 65–80% of revenue. A business performing at the better end of those ratios — running lean, charging well, collecting promptly — will command a higher multiple than one that technically makes money but only because the owner hasn't paid themselves properly.
The rule of thumb: A well-run electrical business in Australia sells at 2.5–3.5x normalised EBITDA. An owner-heavy, cash-reliant business with no staff structure sells at 1.5–2x. Some listed deals are priced higher — some sellers have optimistic ideas about what their business is worth.
What Drives the Multiple Up
A few things push an electrical business toward the top of the valuation range.
Commercial maintenance contracts. A business with regular commercial clients — body corporates, property managers, small commercial tenants — on fixed service agreements is worth more than one that relies on call-out work. Recurring revenue is predictable; predictable is valuable. I've seen buyers pay close to 4x for a business with 60%+ of revenue on annual contracts, even at modest EBITDA levels, because the cash flow risk is genuinely lower.
Licensed staff who stay. The value of an electrical business lives, almost entirely, in its licensed electricians. If the business has two or three qualified staff who've been there for years and plan to stay after the sale — and who don't know the owner personally well enough to walk with him on settlement day — the business is worth substantially more than one where the owner is the only licence on the wall. Transferability of the team is a buyer's biggest concern. It should be a seller's biggest selling point.
Clean financials and BAS compliance. A business with three years of tax returns that reconcile to the BAS statements, sensible debtor days, and no unexplained cash transactions is worth more than one where the accountant needs to "explain a few things." This sounds obvious. It isn't, in practice — the electrical sector has a higher-than-average proportion of businesses where some revenue is unaccounted for (which is also their problem with the ATO, not just with buyers).
Brand and reputation in a defined geography. A business that's been operating in the same area for 10+ years, has consistent Google reviews, and wins repeat work from the same clients through reputation rather than underbidding has a moat that small operators don't. That's worth something — not a huge premium, but real.
What Drives the Multiple Down
Owner dependency. This is the single biggest discount in trades business valuations, and electrical businesses are no exception. If the owner holds the primary contractor licence, does all the quoting, manages all the key client relationships, and takes home the bulk of the margin — the business is worth less than the EBITDA figure implies, because a large chunk of what you're buying is the owner's personal labour output. When he leaves, some portion of that goes with him.
The discount varies. A hard-nosed buyer will normalise the EBITDA to reflect a market-rate management salary (usually $100,000–$130,000 for someone to run a business this size), then apply a further subjective discount — anywhere from nothing to 20% — for key-person risk. If the owner is the only licensed electrician, expect a lower multiple. Full stop.
Subcontractor-heavy workforce. A business that uses subcontractors for most of its labour has lower overhead but also lower defensibility. Subbies can be pulled by competitors, raise their rates, or simply stop being available. A business with employed staff who are W-2 equivalents (i.e., on payroll) is stickier than one built on a network of blokes who are available when they feel like it.
Customer concentration. If 40% of revenue comes from one commercial client, that's not stability — it's a single point of failure. Buyers will either apply a significant discount or try to price the deal with an earn-out to share the risk of losing that client. I've looked at deals where this wasn't disclosed upfront. It always comes out in due diligence. When it does, the price conversation starts again from scratch.
Equipment age and condition. A fleet of vehicles and tools that are fully depreciated and need replacing within 24 months of settlement isn't free. It's a hidden capital expenditure that reduces what you're actually paying for the business. Good buyers model this. Sellers who don't account for it are surprised when offers come in below their expectations.
Worked Example: Valuing a Mid-Size Electrical Business
Say you're looking at an electrical business in Sydney's inner west. Here's what the numbers look like:
| Line item | Amount |
|---|---|
| Revenue | $1,850,000 |
| Cost of sales (labour + materials) | $1,100,000 |
| Gross profit | $750,000 |
| Operating expenses (incl. owner salary $80K) | $380,000 |
| EBITDA (as presented) | $370,000 |
The owner draws $80,000 as a salary but actually works 60 hours a week and does most of the commercial quoting personally. To replace him, you'd pay $120,000.
Normalised EBITDA: $370,000 – $40,000 (additional salary adjustment) = $330,000
The business has two employed licenced electricians, a commercial maintenance book covering about 45% of revenue, and the vehicles are 3–5 years old and in reasonable condition.
At 2.8x normalised EBITDA: $924,000. At 3x: $990,000. The seller is probably asking $1.1–1.2 million. Whether you can get from $1.1M to $990K in negotiation depends on how motivated the seller is and how well you've done your due diligence — but you need the normalisation done before that conversation starts.
If you want to work through the normalisation yourself, the EBITDA normalisation checklist walks through every add-back category with examples from trades businesses.
Commercial vs Residential: Does It Matter for Valuation?
Yes, but not as much as people think.
Commercial electrical work — switchboard upgrades, new builds, infrastructure maintenance — tends to have higher revenue per job and more consistent scheduling. Residential work (power points, safety switches, hot water) is often higher-margin per hour but lumpy and harder to schedule efficiently.
For valuation purposes, what matters is whether the revenue is recurring and predictable, not whether it's commercial or residential. A business with 80% residential work but a strong word-of-mouth engine, consistent Google reviews, and a booking calendar that stays full is worth more than a commercial business that wins jobs through competitive tender and has margins squeezed to single digits.
The businesses that command the highest multiples — across plumbing, landscaping, and electrical — share one characteristic: revenue that comes back without the owner having to chase it.
Licence Transferability: The Thing Buyers Miss
An electrical contracting licence in Australia is issued to a person, not a business. When you buy an electrical business, you're not buying a transferable licence — you're buying a business that operates under the current owner's licence until you (or someone you employ) hold your own.
This matters for two reasons:
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If you're not a licensed electrician, you need a Registered Electrical Contractor (REC) licence holder on staff from day one of ownership. That means either retaining the seller for a transition period, keeping existing licensed staff, or hiring one. Budget for this.
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Sellers sometimes overstate the value of their licence portfolio as a barrier to entry. The licence isn't yours after settlement. The trained, employed staff who hold their own licences — those are yours if they stay.
This is one of those things that sounds like a technicality until you're four weeks post-settlement and your REC has handed in his notice.
When the Asking Price Is Too High
A few warning signs that a seller has priced their electrical business above fair value:
- Revenue multiple instead of EBITDA multiple. "We're asking 1x revenue" sounds modest. On a 15% EBITDA margin, 1x revenue is 6.7x EBITDA. Walk away, or at least laugh politely.
- Unadjusted owner salary. If the EBITDA figure doesn't reflect a market-rate owner replacement salary, the earnings are overstated.
- Equipment included "at value." Fleet and tools should be valued at depreciated market value, not replacement cost. Get an independent assessment if the number is material.
- Three-year pipeline. Promises about upcoming jobs don't appear on balance sheets. They don't get valued.
For a broader look at how to check the financials before committing, that guide covers exactly what you need to verify independently rather than take on trust.
What a Good Electrical Business Looks Like From a Buyer's Perspective
This is covered in depth in Module 4 of the Playbook, but the short version: a good electrical business to buy has employed licensed staff who aren't going anywhere, commercial maintenance work that comes back without the owner's personal involvement, clean and consistent financials over 3+ years, and a handover period that gives you enough time to become the relationship before the seller disappears.
A broker told me recently about a deal that fell over at the last minute because the buyer discovered in confirmatory due diligence that the seller's "long-term commercial client" was actually the seller's brother-in-law, who planned to take his maintenance contract elsewhere once the sale completed. The deal had been structured at 3.2x. The real EBITDA without that contract was about 40% lower. The multiple had been applied to earnings that were about to evaporate.
These things happen. They happen more often than people realise. Learning how to value a small business properly before you start making offers saves you from expensive surprises.
Frequently Asked Questions
How much is an electrical business worth in Australia? Most electrical businesses sell at 2x–3.5x normalised EBITDA. For a business making $100,000 in adjusted profit, that's $200,000–$350,000. For a business making $300,000+ with employed staff and commercial contracts, $900,000–$1.2 million is realistic.
What is a good profit margin for an electrical contractor? The ATO benchmarks suggest 20–35% gross margin after labour and materials. An owner-operator keeping 25–30% net is doing well. Anything below 15% net suggests either underpricing or high overhead that should be examined.
How much can you earn owning an electrical business in Australia? A solo owner-operator in a well-run small business typically draws $120,000–$200,000 (salary plus distributions). A business with 3–5 employees generating $1.5M+ in revenue can support owner earnings of $200,000–$350,000 if structured correctly.
Does an electrical contractor licence transfer when you sell the business? No. In Australia, a Registered Electrical Contractor (REC) licence is issued to a person, not a business entity. The buyer needs their own REC licence holder from day one of ownership.
What is the typical multiple for a trades business in Australia? Most trades businesses (electrical, plumbing, HVAC, painting) sell at 2–3.5x EBITDA. Premium businesses with recurring revenue, employed staff, and minimal owner dependency can reach 4x in competitive deals.
The Bottom Line
An electrical business is a genuinely good thing to own — predictable demand, decent margins, a skill base that's in structural shortage across Australia, and meaningful barriers to entry for customers who don't want to search for a new sparkie every time something breaks. The problem isn't the business. It's the price.
Most sellers have an emotional attachment to what they've built (which is fair) and a valuation framework borrowed from their broker that may or may not reflect reality. Your job as a buyer is to independently calculate normalised EBITDA, understand what drives the multiple for this specific business, and negotiate from evidence rather than intuition.
If you want to keep reading, the newsletter covers more deals, more mistakes, and more of the mechanics of buying and running blue-collar businesses in Australia. And if you're working through a specific deal right now, the EBITDA normalisation checklist is the most practical place to start.