Why January Is When Electrical Contractors Start Asking the Question

The Quiet WeekThe question tends to arrive in the first quiet week of the year

January is the one month when the diary thins out before it fills again. December certificates are filed, the shutdown work is invoiced, and the year ahead is still a page rather than a programme. That gap is where owners start asking what the business is actually worth, which is a different question from whether they want to sell it.

The decision itself is usually made earlier and much more quietly. From the conversations I have with electrical contractors, the thought arrives somewhere in the autumn, gets tested over Christmas with one other person, and then sits unspoken until the spring. Nobody tells their contracts manager in January. What they do in January is start looking for a number.

Asking the question costs nothing and commits you to nothing. It is worth separating the two things it answers: what the business would be worth if it went to market exactly as it stands, and how far that figure sits from the one you had in mind. The second number is the useful one, because it is the only one you can do anything about.

The useful number is not the one the market would put on the business today, but the distance between that figure and the one you had in mind.

The BaselineWhat a baseline valuation of an electrical business actually looks at

A buyer starts with adjusted EBITDA rather than turnover. That is the profit left once your own remuneration is set at a market rate for the job you genuinely do, and once anything personal to you has been taken back out. For most owner-managed electrical contractors the adjusted figure is materially different from the one in the filed accounts, and it is the figure every multiple gets applied to.

The second thing they look at is the split between recurring and project income. Fixed wire testing, periodic inspection and planned maintenance under contract are underwritten differently from installation and fit-out work, because that income arrives again next year without being won again. Put two contractors side by side on the same turnover and the same profit, and the one whose income repeats is worth more before anything else has been examined.

After that come the things that are slow to build and quick to verify: scheme registration and the date of your last assessment, framework and approved-list positions, the depth and grading of the workforce, client concentration, and how much of the work still depends on you being available. Electrical contractors of this size have long traded at somewhere around three to six times adjusted EBITDA, and those five items decide where inside it a given business lands.

The RunwayWhat January gives you that April does not

Selling a business of this kind takes six to nine months once it is properly under way, and the preparation that makes those months go smoothly sits in front of them. Starting the thinking in January rather than in the spring is worth more than any negotiating tactic, because almost everything that lifts a price is slow.

Tax belongs in the picture, stated flatly rather than dramatically. Business Asset Disposal Relief is 10% today on qualifying gains up to a £1m lifetime limit. It rises to 14% from 6 April 2025 and to 18% from 6 April 2026, both announced at the Autumn Budget on 30 October 2024. The completion date governs which rate applies, and anti-forestalling rules have applied since Budget day, so this is a conversation for your own tax adviser rather than a reason to hurry.

The practical use of January is a short list. Three years of accounts and current management figures in a form somebody outside the business can read. A contract register with renewal dates and values. A certification and registration file that is current rather than nearly current. An honest note of what only you know. A January spent on those four items is what shows later, because the questions a buyer arrives with are then answered out of documents that already exist rather than out of a week of searching.