A phase-by-phase due diligence guide covering fleet condition, recurring contracts, technician risk, and liability exposure before you wire a dollar.
Find Drain Cleaning & Hydro Jetting Acquisition TargetsDrain cleaning and hydro jetting businesses offer essential, recession-resistant revenue driven by aging infrastructure and non-discretionary commercial demand. Buyers must rigorously evaluate equipment condition, technician retention, recurring contract quality, and liability exposure to avoid costly surprises post-close.
Verify that reported earnings are real, recurring, and not dependent on a single account or the owner's personal relationships.
Request 3 years of tax returns and P&Ls. Build a clean add-back schedule separating owner compensation, personal vehicle expenses, and one-time costs from true business earnings.
Break revenue into residential emergency calls, commercial maintenance contracts, and municipal accounts. Recurring contract revenue over 30% significantly strengthens deal quality.
Map revenue by client over 24 months. Flag any single account exceeding 20% of revenue as a deal risk requiring earnout protection or price adjustment.
Verify the physical assets supporting the business are serviceable, titled correctly, and operated by qualified, certifiable technicians.
Physically inspect all jetting trucks, CCTV camera systems, and vacuum excavators. Pull maintenance logs and obtain independent mechanic valuations on units over 5 years old.
Verify all operators hold required licenses and are W-2 employees, not 1099 contractors. Assess retention risk and whether key technicians have agreed to stay post-close.
Confirm all drain contractor licenses, commercial vehicle registrations, and local permits are current, in good standing, and transferable to the new entity.
Uncover any unresolved claims, insurance gaps, or contract transferability issues before committing to a purchase price or deal structure.
Obtain 5 years of general liability and commercial auto loss runs. Flag any sewer damage claims, flooding incidents, or gaps in coverage that signal underinsured operations.
Review all maintenance agreements with restaurants, municipalities, and property managers. Confirm assignment clauses allow transfer without customer consent or renegotiation requirements.
Confirm the business qualifies for SBA 7(a) financing. Structure seller notes of 5–10% to satisfy lender standby requirements and tie any earnout to verified contract retention.
Verify the Drain Cleaning & Hydro Jetting acquisition qualifies for SBA financing, the purchase price is supportable by the verified cash flow, and the deal structure protects the buyer's downside.
Confirm the Drain Cleaning & Hydro Jetting meets SBA 7(a) eligibility requirements: the business is for-profit, U.S.-based, within SBA size standards, and the buyer meets personal financial requirements. Some industries have specific SBA restrictions — verify before LOI.
Model verified normalized EBITDA against projected SBA loan payments at current rates. A $1M SBA 7(a) loan at 10.5% over 10 years costs approximately $13,000/month. The Drain Cleaning & Hydro Jetting must generate at least 1.25x debt service coverage after a market-rate manager salary to pass underwriting.
Confirm the seller note is properly subordinated to the SBA loan and goes on 24-month standby as required by SBA rules. If an earnout is included, define exact measurement metrics, time period, and dispute resolution process before signing the purchase agreement.
Before signing a Letter of Intent, request these documents from the seller. Missing or incomplete items are a red flag — not a reason to proceed without them.
Most drain cleaning businesses trade at 2.5x–4.5x SDE. Businesses with strong recurring commercial contracts, late-model equipment, and documented technician teams command the higher end of that range.
Yes. Drain cleaning businesses are SBA 7(a) eligible. Expect to finance 80–90% through SBA debt, with a seller note covering 5–10% and buyer equity of 10–15% at close.
Meet key technicians before close, review compensation relative to market rates, and structure retention bonuses tied to 6–12 month post-close employment. Avoid announcing the sale prematurely.
Owner dependency combined with undocumented revenue. If the seller handles all estimating, customer calls, and quality control personally and financials are inconsistent, walk away or reprice aggressively.
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