How do I check an electrical contractor’s backlog before buying?

Sellers often describe a backlog as a comfort. Treat it as a claim to be tested. Ask for a list of every job in it, marked as signed, awarded but not signed, or merely quoted. Only the first group is firm. For the signed work, read the contracts. Look at who the client is, what the payment terms are, whether the contract can be assigned to a new owner and what happens if the work runs late. Your lawyer should read the larger ones.

Next, ask about margins. Old bids priced before material costs moved can be less profitable than they look. Your accountant can compare the original estimates with costs so far. Then check capacity. Do the licensed electricians and apprentices on staff match the schedule, and are key people planning to stay? A strong backlog with too few crews creates delays and penalties. Finally, ask how the work was won. Relationships with a few general contractors may rest on the seller personally. Ask what share of the schedule depends on one or two clients, because losing either would change the picture quickly.

Key takeaways

• Split the backlog into signed, awarded and merely quoted work.
• Compare original estimates with actual costs to date.
• Test whether the crew can deliver the schedule and will stay.
• Check how much of the schedule depends on one or two clients.