Verify insurance receivables, TPA relationships, and technician certifications before closing on a restoration company acquisition.
Find Fire & Water Damage Restoration Acquisition TargetsAcquiring a fire and water damage restoration company requires scrutinizing insurance-driven revenue quality, TPA network transferability, and IICRC certification status. Deals in the $1M–$5M revenue range trade at 3.5–5.5x EBITDA and are typically SBA-eligible, but hidden risks in receivables aging and owner-dependent relationships can erode post-close performance significantly.
Assess true cash collections, insurance billing integrity, and the sustainability of carrier-driven revenue before validating any purchase price.
Request full AR aging segmented by carrier, job, and days outstanding. Flag balances over 90 days and unresolved supplement disputes that may never collect.
Analyze job costing reports separating water mitigation, fire restoration, and mold remediation margins. Blended margins mask underperforming loss categories and subcontractor dependency.
Identify if more than 30% of revenue flows through a single TPA program. Concentration creates existential risk if that vendor relationship cannot transfer post-close.
Evaluate the transferability and stability of preferred vendor agreements and insurance adjuster relationships that generate the majority of inbound job volume.
Obtain all active preferred vendor and TPA contracts with State Farm, Allstate, or Farmers networks. Confirm assignment clauses and carrier approval requirements for ownership changes.
Identify which adjusters and agents refer jobs and whether relationships are owner-held or team-held. Owner-dependent referrals are high attrition risk post-close.
Review historical reimbursement rates per Xactimate line item over three years. Declining rates or increasing supplement disputes signal deteriorating carrier relationship quality.
Validate technician certifications, workforce stability, and equipment condition to identify hidden capital requirements and post-close operational risks.
Verify current WRT, ASD, and AMRT certifications for all field technicians and project managers. Lapsed credentials create compliance exposure and adjuster trust issues immediately post-close.
Assess project manager tenure and compensation. Identify whether any single employee controls adjuster relationships or estimating workflows that would be lost upon departure.
Commission independent appraisal of drying equipment, extractors, and vehicle fleet. Deferred maintenance and aging assets often represent $150K–$400K in near-term replacement costs.
Verify the Fire & Water Damage Restoration 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 Fire & Water Damage Restoration 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 Fire & Water Damage Restoration 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.
Restoration businesses typically trade at 3.5–5.5x EBITDA. Higher multiples apply to companies with active TPA programs, IICRC-certified teams, and documented owner-independent operations above $500K EBITDA.
Yes. Restoration companies are SBA 7(a)-eligible. Most sub-$3M deals are structured with 80–90% SBA financing, 5–10% seller note, and 10–15% buyer equity at closing.
TPA contract non-transferability is the highest risk. If preferred vendor status requires carrier approval and is revoked post-close, referral volume can drop sharply within 90 days.
Request three years of job-level P&L reports, AR aging by carrier, and Xactimate job files. Cross-reference cash collected against invoiced revenue to identify write-offs and supplement dispute patterns.
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