How to buy a low voltage business: where deals come from, what to check, how to pay

Part of the Low voltage guide: buying, selling, valuation and who is buying.

To buy a low voltage business, decide what kind of work you want to own, find firms that fit, and check the licences, the repeat work, the backlog and the people before you make an offer. Most buyers finance the deal with an SBA 7(a) loan, a seller note and some investor money. This guide is for first-time buyers looking at structured cabling, audiovisual, security and network installation companies. By the end you will know where the deals are, what to read, and what should make you walk away.

What is a low voltage business?

A low voltage business installs and services systems that run on low power. That means structured cabling, data networks, Wi-Fi, cameras, access control, intercoms, audiovisual rooms and paging. Many firms do several of these at once.

The customers are offices, schools, hospitals, warehouses, campuses and data centers. Some work comes through general contractors on new buildings. Some comes straight from the building owner, again and again, as staff move and systems change.

That split matters more than anything else when you buy. Our overview of buying or selling a low voltage business explains why buyers pay more for repeat work than for one-off projects.

What should go in your buy box?

A buy box is one page that says what you will and will not buy. For a low voltage firm, write down these lines before you look at a single listing:

• Type of work. Cabling, AV, security, or a mix. Decide if you want new construction, repeat service work, or both.
• Size. A price range and a minimum owner's earnings (SDE) or EBITDA.
• Location. How far you will travel, and which states. Licence rules change at the state line.
• Customer mix. How much revenue must come from repeat clients rather than one-off bids.
• Owner's role. Whether a project manager or operations lead already runs the jobs.
• Deal breakers. For example, one general contractor sending most of the work, or the only licence held by the seller.

The tighter the box, the faster you can say no. Saying no fast is most of the job. Our general guide on how to buy a business walks through the full buy box process.

Where do low voltage deals come from?

There are two pools of deals.

Listed businesses. Brokers post cabling, AV and security firms on business-for-sale marketplaces. They are easy to find and get many buyers. Low voltage firms are often listed under electrical, telecom or security, so search all three. At Acquisitions.com our AI scans 15+ marketplaces every day and screens each listing against a client's buy box.

Off-market businesses. Many low voltage firms were started by one founder decades ago. Some of those owners would sell but have never listed. You reach them through brokers, through trade contacts, through electrical and IT firms that pass on smaller work, and through your own letters and calls. There is less competition, but it takes more time.

You are not only competing with other individuals. Private equity firms and national integrators also buy in this trade. Our page on who is buying security businesses shows how active those buyers are in the security side.

Which licences and certifications should you check?

Start here, because a licence problem can stop the business from working the day after closing.

Rules differ by state. Two examples:

• In California, the state licence board has a separate C-7 low voltage systems class. The board says it does not cover low voltage fire alarm systems, which need their own class.
• In Washington, the state code has a limited energy specialty, known as 06. The code says it is restricted to low voltage circuits.

Other states fold this work into an electrical licence, a security or alarm licence, or nothing at all. Do not assume.

Ask three questions for each licence:

1. Is it held by the company or by a person?
2. If it is a person, are they staying after the sale?
3. Does the licence cover every type of work the firm does today?

Then look at staff certifications. BICSI, the trade group for cabling design, issues the RCDD credential for telecommunications distribution design. Many large customers ask for certified designers and technicians. Makers of cameras, access control and AV systems also certify installers. A firm that loses its certified people can lose its place on approved vendor lists. Have a lawyer confirm what must be in place after closing.

What should you check in the numbers?

Get three years of tax returns, profit and loss statements and job costing. Then read for these things:

1. Revenue by type. Split it into new construction projects, repeat client work, and service or maintenance agreements. The last two are worth the most.
2. Profit by job. Job costing shows which kinds of work make money. A firm can grow revenue on bids that lose money.
3. Backlog. Read the signed work not yet done. Check the margin on it, not just the size. Ask how much of it is already billed.
4. Customer concentration. One general contractor or one client sending a large share of the work is a risk. Our glossary entry on customer concentration shows how to measure it.
5. Add-backs. Check every expense the seller wants added back to profit. If it would still be paid after you own the firm, it is not an add-back.
6. Work in progress. On project work, money billed ahead of the work done can make one year look better than it was.

For a larger deal, pay for a quality of earnings report. It ties the profit to bank statements and tax returns.

How do you finance a low voltage acquisition?

Most buyers combine three sources: an SBA loan, a seller note and investor money.

SBA 7(a) loan. The SBA says the maximum 7(a) loan is $5 million, and changes of ownership are an allowed use. Its 7(a) terms page for lenders sets a maturity of ten years or less, unless the loan pays for real estate or long-life equipment. Under the SBA's lender rules (SOP 50 10), the buyer in a full change of ownership puts in at least 10% of the project cost.

Seller note. The seller lends you part of the price and is paid over time. It keeps the seller interested in a smooth handover. Under the current SOP, a seller note counts toward your equity only on full standby, so check the rules with your lender.

Investor money. For bigger deals, an investor puts in equity for a share of the business.

Low voltage firms often wait weeks to be paid on project work, so ask the lender about working capital early. Acquisitions.com is an advisory firm and does not lend; we introduce buyers to lenders and investors.

What are the red flags in a low voltage business?

Walk away, or change the price or structure, when you see these:

• The seller holds the only licence and has no plan to stay or transfer it.
• One general contractor sends most of the work. If that contractor leaves, the revenue leaves too.
• No job costing. If the owner cannot show profit by job, you cannot tell good work from bad.
• Backlog that is mostly billed already. You inherit the work but not the cash.
• Lead technicians with no reason to stay. In this trade the techs often hold the client relationships.
• No service agreements. All project work, with nothing that renews.
• Safety or warranty claims that the seller cannot explain.

Most problems found in diligence can be solved by structure: a larger seller note, part of the price held back, or an earn-out tied to results. Ask a CPA about asset versus stock purchase tax, and a lawyer about contracts and licences.

What happens after closing?

The first 90 days decide whether the deal works. Keep the staff, keep the customers and change little. Meet the top clients with the seller. Make sure the licences and certifications are in place in your name or your team's name.

The seller usually stays for a transition period that is written into the purchase agreement. Once you know the business, look at quoting, scheduling and billing. Those tasks are often slow in small trade firms. Our guide on AI after an acquisition covers where software can save time.

I have advised buyers and sellers of small and mid-sized businesses since 2016. We work on established, profitable businesses, typically $500K to $50M in revenue. Buyers who want help finding and checking low voltage deals can start at /buy.