Why Recurring Testing Income Anchors Your Electrical Business Multiple

Owners often ask what multiple their business will sell for, and the honest answer is that it depends less on size than on the shape of the income. This is one of the four themes in our September compliance-quarter briefing. Here I want to take the valuation question head on, and connect it to why the 2026 compliance changes matter to your number rather than just to your workload.

The Ladder, in Plain Terms

Start with the ranges electrical businesses actually change hands for. On the sector's own published figures, a mixed installation and testing firm, NICEIC or NAPIT registered with moderate recurring revenue, tends to trade at around 3x to 5x EBITDA. A specialist testing and inspection business with framework positions and a retained qualified team sits closer to 4.1x to 4.6x. And an operator with more than half its revenue in testing, established framework positions, NICEIC registration, ISO certification and a team of thirty or more qualified engineers reaches 5x to 7x.

Those are market observations, not a promise for any one business, and where a firm lands is driven by revenue quality and workforce far more than by anyone's skill in the negotiating room. But look at what changes as you climb the rungs. It is not turnover. It is the proportion of income that is contracted, certificated and recurring.

Two businesses with identical turnover can sit two rungs apart on the ladder. The gap is not size. It is how much of the income recurs.

Why Recurring Income Earns a Higher Multiple

A multiple is really a measure of confidence. A buyer paying five times earnings rather than three is saying they believe those earnings will still be there in future years. Recurring, contracted testing income gives them that confidence, because it is predictable and largely non-discretionary. Project turnover, by contrast, has to be won again every year, so it carries more risk and earns a lower multiple even at the same level of revenue.

This is why a fixed-wire testing and inspection book behaves differently from an equivalent slice of installation work. The testing income arrives on a schedule set by regulation, not by the sales pipeline. To a buyer, that predictability is worth paying up for, and it is the single clearest lever an owner has on their own multiple.

Where the 2026 Catalysts Come In

Here is the part that ties this month's themes together. The compliance changes running through 2026 are not just regulatory noise; they are handing owners a structural reason to grow exactly the income that sits at the top of the ladder. The EICR renewal wave is widening a base of contracted, five-yearly testing work, and Amendment 4 is reinforcing the value of a currently competent, certificated team to deliver it.

In other words, the regulatory calendar is quietly encouraging you to build the highest-quality revenue line an electrical business can hold. An owner who leans into testing and inspection over the next year or two is not just chasing busier work; they are moving their business up the multiple ladder, because that is precisely the income a buyer rewards with a stronger number.

None of this is a signal to sell today. It is a reason to understand where your business sits on the ladder now, and what would move it up a rung before you ever get to a sale. Whether that is this year or in three, growing the recurring, certificated share of your income is the most reliable way to lift the multiple when the time comes.