Electrical contractors are becoming one of private equity’s favorite infrastructure investments, but the opportunity extends well beyond the artificial intelligence (AI)-driven data center surge.

Grid modernization, building electrification, aging infrastructure, and increasingly complex electrical systems are creating demand that stretches far beyond data centers and new construction, while expanding maintenance and service opportunities are making many contractors look less like cyclical construction businesses and more like long-term infrastructure platforms.

Deal activity in the space has increased swiftly in North America, hitting a record number of deals in 1Q26, according to Mergermarket data.

“The US electrical contracting sector has become one of the most actively pursued areas in the private equity landscape, and for good reason,” said Paul Giovannoni, partner, and Ryan Foley, managing director, at construction-focused consulting and investment banking firm FMI Consulting. They cited three structural forces reshaping the industry: unprecedented electricity demand, a highly fragmented ownership base, and long-term growth drivers that extend well beyond the traditional construction cycle.

^{Source: Mergermarket, data correct as at 10 Jul 2026}

Recent transactions are already validating that shift. Giovannoni said acquisitions involving Cupertino Electric, Miller Electric, CEC Facilities Group, and PayneCrest established new valuation benchmarks for scaled electrical contractors, while deals involving Shermco Industries and Qualus illustrate how buyers are using buy-and-build strategies to expand electrical infrastructure platforms.

While private equity has long been attracted to the industry’s roll-up potential, advisers said AI-driven data center development and broader electrification have created a new investment thesis built around structural growth rather than consolidation alone.

“The development of AI and associated computational requirements is creating genuinely new demand in the market, a change from past trends and making future growth for many contracting businesses more feasible,” said Raymond Gong, senior partner at home services-focused fractional CFO firm Profitability Partners.

Power shift

But data centers represent only one piece of a much broader increase in electricity demand.

As commercial buildings electrify HVAC systems, install electric vehicle charging infrastructure, integrate renewable energy, and deploy increasingly sophisticated building controls, owners are placing greater demands on electrical systems that require ongoing upgrades, monitoring, and maintenance. At the same time, much of the US commercial building stock has outlived the expected life of its electrical infrastructure, creating a growing pipeline of retrofit work.

“The statistics are staggering,” Foley said. “We’ve never seen forecast revisions like this in the history of the modern grid,” referring to the sharp increase in projected electricity demand driven largely by data centers.

Rather than relying primarily on project-based construction revenue, many electrical contractors are building longer-term maintenance relationships through service agreements, preventive maintenance programs, and ongoing system upgrades. As a result, portions of the sector increasingly resemble infrastructure and industrial service businesses rather than traditional construction firms.

Mission-critical markets such as data centers, healthcare, industrial facilities, and government buildings are particularly attractive because maintenance cannot easily be deferred and system reliability is essential, Giovannoni said.

Historically, PE firms gravitated toward HVAC contractors because of their recurring maintenance revenue, while electrical contractors received comparatively less attention. Today, construction-oriented electrical contractors with specialized expertise in high-voltage systems, design-build capabilities, and mission-critical infrastructure are attracting significant investor interest.

“New installation, design-build, high/medium-voltage, utility line and infrastructure construction work is highly sought after by buyers,” said Anna Brumby White, managing director at Focus Investment Banking.

She said PE-backed buyers have recently shown greater interest in construction-oriented electrical contractors than traditional service businesses because the current investment cycle is expected to generate years of follow-on maintenance work. Future telecom upgrades, including the transition toward 6G, could further expand demand for highly skilled electrical contractors, White added.

Current opportunity

Scarcity of skilled labor is becoming another competitive advantage.

Demand for qualified electricians continues to outpace labor supply, particularly in states experiencing significant data center development, according to Robert Lytle, partner at Grant Thornton Stax. In many markets, only a handful of contractors possess the scale, workforce and technical expertise to compete for the largest projects, creating what he described as a growing competitive moat for established operators.

Those advantages have translated into premium valuations, particularly for larger contractors with meaningful exposure to data centers and other mission-critical end markets.

Lytle said larger operators in attractive data center markets are commonly achieving multiples of 8x EBITDA or more. Smaller contractors, however, are not always seeing the same upward pressure, with buyers remaining more selective around businesses lacking differentiated capabilities or end-market exposure, White added.

According to Foley, PE firms continue to pursue platform and add-on strategies, while strategic buyers are often seeking geographic expansion, customer relationships, or specialized capabilities that complement existing operations. Both groups, however, are increasingly focused on businesses positioned to benefit from the long-term electrification of the economy rather than any single construction cycle.

The next acquisition opportunities may also emerge from an unexpected corner of the market: smaller regional contractors.

As larger contractors redirect labor and resources toward hyperscale data centers and other technically demanding projects, they are leaving behind work in sectors such as healthcare, education, and light industrial, Foley said.

That is creating an opening for smaller regional contractors to move into higher-value markets, diversify their customer bases, and become more attractive acquisition candidates themselves.

Gong said skilled trades are becoming more attractive to investors because they are among the occupations least vulnerable to AI-driven automation.

“It’s a lot harder to replace a skilled blue-collar tradesman than it is to replace a white-collar office worker.”