Selling an Electrical Utilities Business

Value usually comes from forward earnings under your rate order or contract structure, plus the cost and timing of the capital plan. For regulated utilities, buyers often start with rate base, allowed ROE, and rider or tracker recovery, then adjust for reliability trends, open dockets, and catastrophe exposure. For utility-adjacent platforms, buyers lean harder on MSAs, renewal history, and safety performance. Start with Rejigg’s free valuation calculator, then refine with your storm history, hardening backlog, and recovery mechanics.

SAIDI and SAIFI shape the buyer’s view of near-term spend and commission scrutiny. If metrics are worsening outside of major events, buyers often assume a bigger capital and vegetation program and may respond with a lower price, escrow, or contingent value tied to improvements. If reliability is improving, it can support better terms when you can show what changed, what it costs to maintain, and which feeders drove the improvement. Buyers expect major-event context, driver breakdowns, and a credible 24 to 36-month plan.

It depends. A broker can help when you need a wide buyer search or you want a buffer between you and bidders, but many owners can run a focused process themselves. Rejigg provides vetted buyer access, digital NDAs, a secure data room for regulatory, reliability, and capex support, and an offer dashboard, free for sellers. If you want a step-by-step sequence, use the preparation guide and keep disclosure staged to protect sensitive grid information.

Most deals take longer than a typical services sale because diligence and approvals are heavier. Six to twelve months from first outreach to close is common, and it can run longer when commission approval, municipal consent, or contract assignments are involved. The fastest processes usually have buyer-ready packs up front: rate case summary, open docket list, reliability history with major-event notes, asset condition evidence, and a 5 to 10-year capital plan with approval status. A secure data room and NDAs reduce the start-stop delays.

Many jurisdictions require commission approval for a change of control, and you may also need municipal consents, franchise assignments, and approvals under interconnection or transmission agreements. The longest lead item is often the review timeline and any conditions placed on the transaction, such as service-quality commitments, ring-fencing, reporting, or rate protections. Build an “approval map” with each consent, filing requirements, expected timelines, and any relevant precedent orders in your state. Sharing that early helps buyers underwrite closing risk.

Sometimes, but it is more common for utility-adjacent contractors, such as storm restoration, meter services, and vegetation management. Regulated utilities often face approval and asset-structure complexity that can limit SBA fit. SBA lenders still expect clean financials, support for add-backs, a clear view of contract concentration, and a strong safety record. Rejigg’s SBA loan calculator helps model payments and down payment scenarios, and a data room can speed lender diligence.

Working capital is the short-term operating cushion the buyer expects at closing, usually AR, inventory and materials, and prepaid items, less AP and accrued expenses. Utilities can swing seasonally because of storms, fuel and power supply timing, true-ups, and billing cycles, so targets are often set using an average over a defined lookback period. Problems show up when sellers deliver less than the target and take a purchase price adjustment at close. Compare offers based on working-capital terms, not just headline price.

Buyers usually separate routine storm response from major-event spikes, then focus on recovery: riders or trackers, regulatory deferrals, FEMA, insurance, or customer pass-throughs. Recovery timing matters as much as total recovery, since slow reimbursement can pressure liquidity and working capital. A clean package includes a major-event log, the cost tracking method, restoration KPIs, and the exact recovery mechanism with expected timing. Good documentation reduces last-minute pushback during diligence.

Buyers treat vegetation management as a reliability and liability control program, especially in fire-prone areas. They look for a consistent trim cycle, proof of completion by circuit or mileage, clear prioritization of worst-performing feeders, and contractor capacity. They also ask how you handle hazard trees, QA, and audit findings, because defensibility can matter in claims and regulatory reviews. Bring cycle miles, spend history, backlog, and outage correlation, plus the work order and inspection proof.

Regulated utilities are underwritten on rate base growth, allowed returns, and the timing and certainty of cost recovery, so buyers focus on rate orders, open dockets, and service-quality obligations. Utility contractor platforms are underwritten on MSAs, bid and renewal cycles, crew capacity, safety, and storm mobilization terms. Both depend on reliable execution, but the proof is different. For a utility, it is filings and operational metrics, while for a contractor, it is contracts, scorecards, and utilization.

Earnouts are less common for core regulated returns, but they can appear around discrete milestones, such as commission approval timing, a rate case outcome, delivery of a capital program, or hitting reliability targets. They are more common in contractor platforms tied to MSA renewals, margin, or utilization. The main risk is control after closing, since staffing and capex decisions can change whether targets are achievable. If you consider an earnout, define the metric precisely, reporting, dispute resolution, and what happens during major events.

Expect deep requests on operations: outage history with major-event notes, inspection and condition summaries, failure rates, vegetation cycle records, and the 5 to 10-year capital plan with approval status. On the business side, buyers will ask for rate orders, open dockets, audit history, storm recovery mechanisms, and safety incidents with corrective actions. Many also review OT controls for SCADA, relays, and remote access, especially where a system event would be high consequence. A well-organized data room keeps this moving.

Buyers want to see whether power supply is a true pass-through under a fuel or power cost adjustment clause, or whether price risk can hit margin and cash. They review supply sources, contract expirations, counterparty strength, and the next two to three years of exposure, including any renewable, capacity, or congestion obligations. When contracts are short-dated or hedging is limited, buyers often underwrite higher volatility and a larger liquidity buffer. Provide a simple schedule of volumes, terms, expirations, and recovery mechanics.

Structure depends on approvals, tax outcomes, and legacy liabilities, so regulated utility deals often use stock or asset structures that fit commission requirements and ring-fencing expectations. Closing periods can be long, and conditions often include service commitments and reporting. Utility contractor platforms usually look more like middle-market M&A with an LOI, working-capital targets, and reps and warranties, sometimes with seller financing. In both cases, structure follows what must transfer, such as franchises, MSAs, licenses, and prequalification status. Use deal negotiation guidance to catch value leaks in terms.

In utilities, concentration often shows up through load, not churn. A single mine, refinery, or data center can drive peak demand, force feeder and substation upgrades, and create stranded-asset risk if the load drops. Buyers typically ask for top load customers, special contracts, line-extension policies, and who pays for upgrades and system reinforcement. If you can show planning studies, cost responsibility rules, and a disciplined process for extensions, concentration becomes a manageable underwriting item.

Buyers usually want a structured transition because dispatch coverage, switching authority, storm response, and regulator and municipal relationships cannot pause. Three to twelve months of seller support is common, and involvement may extend through the next storm season or a major filing. Spell out decision rights early, including who approves outages, capex scope changes, and vendor changes, plus communication and escalation paths. Getting this into the LOI reduces friction later.

Electrical utilities and contractors hold sensitive system and customer information, including maps, OT details, and critical infrastructure procedures. Use staged disclosure: teaser, then NDA, then limited data room access, then management calls, expanding access only as buyers prove seriousness. Avoid emailing system maps or control documentation to broad lists. Rejigg supports buyer pre-vetting, digital NDAs before access, and a secure data room where you control who sees each folder and when. That protects operations while keeping momentum.

Tax outcomes depend on entity type and deal structure, and utilities add complexity through depreciated plant, deferred taxes, and transaction costs tied to approvals. Asset sales can trigger depreciation recapture and higher ordinary income, while stock sales may be more favorable for sellers but less attractive to buyers seeking basis step-up or liability protection. Bring a tax advisor in early and model multiple structures before signing an LOI. Compare offers using estimated after-tax proceeds, not just purchase price.