Quick answer: Buyers value an electrical or lighting products manufacturer on adjusted EBITDA and on how well it holds price and share. They examine the specification and wholesale channels, the independent sales representative network and its agreements, price erosion on mature products, the share of sales from recent products, product certifications, component sourcing and duties, and warranty exposure. The public electrical equipment group trades at a multiple well above the other groups in this series, and it is a poor guide for a small private maker.
Key points
- The public multiple is high for reasons that may not apply. A small maker of conventional lighting or electrical products is not priced like the fastest-growing names in the public group.
- Independent sales representatives often hold the customer relationships. Buyers examine their agreements, commissions and what happens to them after a sale.
- Price erosion is a feature of mature product lines. Buyers want evidence that cost reductions and new products offset it.
- Certifications, sourcing and duties are core diligence topics. Products must be listed to be sold, and many components are imported.
Why this category needs a warning label
The electrical equipment group in the public data trades at a much higher multiple than any other group in this series. A private maker of lighting fixtures, wiring devices, enclosures or similar products may see that figure and conclude that its business is worth a comparable multiple of earnings. It almost certainly is not.
Public multiples reflect expectations about growth and position, and the companies in a group can differ enormously. Valuation professionals look at the features of the specific company and use public data as one reference among several. For this category, the gap between the public figure and the likely private pricing is larger than usual.
Public-market reference data
The January 2026 data for the electrical equipment group, covering 112 US-listed firms, shows an enterprise value to EBITDA multiple of 24.6x, an EBITDA margin of 12.7% and a gross margin of 31.8%.[1][2]
Public-company reference data, United States, as of January 2026[1][2]
| Damodaran industry group | US-listed firms | EV / EBITDA | EV / EBIT | EBITDA margin | Gross margin |
|---|---|---|---|---|---|
| Electrical Equipment | 112 | 24.6x | 43.2x | 12.7% | 31.8% |
The multiples cover companies in each group that have positive EBITDA; the margins come from the same author's separate margin dataset for the same industry groups. Most private companies are smaller, less liquid and less diversified than these public companies, so private-company transaction multiples differ, and often sit below them. The Electrical Equipment multiple is far above the other groups used in this series, so it should not be used as a guide to a small maker of conventional electrical or lighting products.
The multiple is far above the figures for building materials or machinery in this series, while the EBITDA margin is not high. That combination means the market is paying for expected growth and for particular companies, not for the margin the group earns today. It is context for the range of public pricing and not a basis for pricing a smaller private business. The guide to valuation multiples explains why and how buyers adjust.
What buyers examine
Channels. Electrical wholesalers, lighting showrooms, contractors, specifiers such as architects and designers, original equipment customers and online sellers. Buyers analyze revenue and margin by channel and the strength of relationships.
Sales representative networks. Many manufacturers sell through independent agencies. The agreements govern territory, commission and termination, and the agencies often control the relationship. A change in ownership can prompt them to review whether to continue, so buyers meet the largest and ask about transition.
Specification and projects. For commercial products, sales follow design and bid cycles. Buyers look at quote volumes, win rates, backlog and the time from specification to shipment.
Price erosion and vitality. Mature lighting and electronics products tend to fall in price. Buyers examine price history by product line, the share of sales from products introduced recently and the engineering pipeline.
Product certification and codes. Safety listings and efficiency qualifications are needed to sell many products, and codes and standards change. Buyers confirm that listings are current, test records are complete and that product changes have been properly evaluated.
Sourcing, duties and inventory. Components such as drivers, chips, housings and finished goods are often imported. Buyers review supplier concentration, lead times, duties and freight, and inventory risk from obsolete or slow-moving items.
Warranty and field performance. Long rated lives mean long warranties. Claims history, reserves and field failure rates are tested, as the working capital peg guide explains for reserves in general.
Customer concentration. Large distributors and a few project customers can dominate sales. The concentration guide explains how this affects price.
Adjustments
In addition to owner items in the add-back guide, buyers examine one-time engineering and certification costs, inventory write-downs when products are discontinued, freight and duty spikes, warranty settlements and commissions paid to representatives or terminated agencies. Costs of new product development are normal and recurring.
Illustrative example: What price erosion can do to a mature line
A lighting manufacturer sells $15,000,000 a year of a mature product line whose prices fall 6 percent each year while unit costs stay flat. That removes $900,000 of gross profit in the first year. At an illustrative 6.0x, a buyer sees $5,400,000 of value at risk unless the seller shows cost reductions, new products or contracts that offset the decline. A seller that can show that erosion was matched by lower costs in the past is in a stronger position. The numbers are invented to show the effect and are not benchmarks.
Who buys
Strategic buyers include larger lighting and electrical products companies adding lines, channels or capabilities, and building products groups assembling electrical portfolios. Private equity firms acquire manufacturers with strong specification positions and sales networks and build platforms. As the comparison of strategic and financial buyers explains, strategic buyers can price in shared purchasing and combined channels.
Preparing for a sale
- Prepare revenue and margin by channel, product line and customer for several years.
- Summarize representative agreements and commissions, and your plan for continuity.
- Show price history by product, with the cost offsets and the share of recent product sales.
- Provide certification records and test reports for each line.
- Document suppliers, countries of origin, duties and inventory by age.
- Compile warranty claims and reserves.
The industrials and building products series covers related industries.
Frequently asked questions
Why is the public electrical equipment multiple so high?
It reflects what public investors pay for the group’s expected growth and positions. A small private manufacturer of mature products faces different growth, competition and scale, and buyers price it on that basis. The table is context for the range of public pricing, not an estimate of what a private business is worth.
What are independent sales representatives, and why do buyers care?
They are outside firms that sell a manufacturer’s products in a territory, usually for a commission, and often hold the relationships with specifiers and distributors. If they are disrupted by an ownership change, sales can fall. Buyers read the agreements for term, termination, territory and commission, and they speak with the largest firms.
What is a vitality measure?
The share of sales from products introduced in the recent past, such as the last few years. A high share indicates that the company renews its range. A low share suggests reliance on mature products that tend to lose price. Buyers use it to judge the pipeline and the risk of erosion.
How do duties and imports affect value?
Many electrical components and finished products are sourced overseas. Duties, shipping costs and supply disruptions affect margin, and buyers ask about alternate sources, pricing power to recover increases and the history of such changes.
Need a valuation you can use in a sale or acquisition decision?
The Impetus Group prepares transactional valuations from the standpoint of strategic and financial buyers. A valuation is a standalone engagement with its own scope and fee, and it can be the first step before a sale or acquisition process.
Related guides
- Customer Concentration and Valuation: How Buyers Price the Risk: Why buyers pay less for businesses that depend on a few customers, how they measure concentration, and what owners can do to reduce the discount before a sale.
- Valuation Multiples Explained: EV/EBITDA, EV/Revenue and More: What valuation multiples are, how EV/EBITDA, EV/revenue and EV/EBIT work, what drives a higher or lower multiple, and how to use public data with care.
- EBITDA Add-Backs: What Buyers Accept and What They Reject: Learn which EBITDA add-backs buyers accept in a sale, which they reject, and how adjusted EBITDA changes enterprise value, with a worked illustration.
- Net Working Capital Peg: How the Working Capital Adjustment Works: The working capital peg sets the level of working capital a seller must leave in the business at closing. See how it is calculated, negotiated and adjusted.
More in industrials and building products
- Building products distributors: How buyers value building products distributors: supplier agreements, branch economics, inventory inflation, contractor credit, working capital and multiples.
- Metal fabrication and steel building products: How buyers value metal fabricators and steel building products: steel price pass-through, customer concentration, capacity, skilled labor, backlog and asset value.
Sources
- Enterprise Value Multiples by Sector (US), data as of January 2026. Aswath Damodaran, NYU Stern School of Business. Accessed October 8, 2026.
- Operating and Net Margins by Sector (US), data as of January 2026. Aswath Damodaran, NYU Stern School of Business. Accessed October 8, 2026.
This guide is general education. It is not a valuation opinion, appraisal, investment advice, or legal or tax advice. How these guides are made.