Installation Backlog, Signed Contracts and Customer Deposits at Closing
When a buyer acquires a solar installer, they are not just buying past results. They are stepping into signed contracts that have not yet been installed, jobs waiting on permits or utility approval, and deposits customers have already paid. A solar installation backlog can be a valuable part of the business, but it can also hide obligations. How the backlog is verified and handled at closing can affect price, cash flow and the buyer’s first months of ownership.
This article is general information for buyers and sellers of existing, operating solar installation companies. It does not address financing solar systems or projects. Contract terms, deposit rules and consumer protection requirements vary by state, and buyers should consult qualified attorneys and accountants. Nothing here is legal, tax or accounting advice.
What Makes Up the Backlog
- Signed residential contracts: homeowners who have agreed to an install that has not started
- Commercial projects: contracts with businesses or property owners, sometimes with progress billing
- Jobs in progress: installs underway or awaiting inspection or interconnection
- Service and battery add-ons: smaller jobs scheduled for existing customers
How Buyers Test Backlog Quality
Not every signed contract becomes an install. Buyers often review:
- Cancellation history and the reasons customers withdrew
- Whether customer financing has been approved, where the customer is using a third-party financing arrangement
- Permitting, design and utility status for each job
- Pricing on older contracts compared with current material and labor costs
- Whether contracts can be assigned to a new owner and whether customer consent is needed
Customer Deposits
Deposits are money the company has received for work it has not yet performed. If the seller has already spent those deposits, the buyer may inherit the obligation to complete the work without receiving that cash. Buyers frequently ask for a deposit schedule reconciled to bank records, and the purchase agreement may address deposits through a price adjustment or other mechanism. Some states regulate how deposits on home improvement work may be collected or held, so counsel should review the specifics.
Jobs Underway at Closing
For jobs in progress, the parties need to agree who is responsible for completing the work, who receives the remaining payments and who bears the cost of any problems. A clear cutoff and a job-by-job schedule help avoid disputes.
Connection to Warranties
Jobs completed shortly before closing may still be within early warranty periods. See our article on solar workmanship warranties.
Effect on Price and Structure
A verified backlog may support confidence in near-term revenue, while an uncertain one may lead a buyer to adjust price or seek protection. Some deals tie part of the price to backlog conversion through seller financing or earnout terms. See our articles on solar installation company valuation and solar installer seller financing.
Working Capital After Closing
Completing a backlog takes cash for materials, labor and permits before final payments arrive. Buyers should plan for that need. Our page on solar business working capital and lines of credit explains how we approach these requests for existing companies.
Backlog in Due Diligence
Our solar installer due diligence checklist covers backlog alongside other items.
US Professional Funding helps buyers finance the acquisition of existing, operating solar installation companies. Learn more about our solar business acquisition financing.
