Confidential — Acquisition Brief The Deal Sheet · Feb 2026
Business-Level Analysis — Deal #81

High-Performing Restoration Franchise in Major Texas Market

Full acquisition analysis: financials, market context, valuation, risk assessment, and 100-day integration plan.

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Conditional Strong commercial franchise with excellent margins (42% SDE) and recurring insurance relationships, but asking price at 3.8x SDE requires verification of reported cash flow and mitigation of franchise dependency risks.
$6.1M
2024 Revenue
$1.59M
Est. SDE (reported $2.55M)
2.8x-3.2x
Est. Fair Multiple SDE
$4.5M-$5.1M
Est. Fair Value (vs $6M ask)
01 — Business Overview

At a Glance

Established restoration franchise serving Houston metro with 70% commercial focus, strong insurance carrier relationships, and experienced management team. Reported $2.55M SDE (42% margin) substantially exceeds industry norms—reconstruction shows $1.59M SDE at 26% margin, suggesting owner add-backs or non-recurring income. Hurricane/flood-prone market drives consistent demand.

72.0
Revenue Quality
Diversified commercial + residential mix with strong recurring base
78.0
Market Position
Las Vegas: extreme heat demand, population boom, construction surge
58.0
Information Quality
Limited public data — full financials behind NDA; requires verification

Key Strengths

  • Strong commercial presence (70%+ revenue) with established insurance carrier and property manager relationships
  • Absentee-ready operations with experienced management team handling day-to-day activities
  • Houston metro benefits from humid climate and hurricane exposure driving consistent restoration demand
  • Nationally recognized franchise brand provides systems, training, and insurance program access
  • Multiple underdeveloped growth channels: residential marketing, reconstruction conversion, additional service lines

Key Questions

  • Reconcile reported $2.55M SDE (42% margin) vs reconstructed $1.59M SDE (26% margin)—what owner add-backs or one-time income explain the $966K gap?
  • What percentage of revenue comes from top 5 commercial clients? What contracts or retention mechanisms exist?
  • Which specific franchise brand? What are annual royalty rates, marketing fees, and renewal terms?
  • What insurance carrier programs drive commercial referrals? Are relationships transferable or tied to current ownership?
  • What equipment is included? Age and condition of drying/demolition equipment, vehicles, and monitoring technology?
  • What is current backlog? Average project size and duration for commercial vs residential work?
  • How many W-2 employees vs 1099 contractors? What turnover and wage pressure exists given 75% of Texans report skilled labor shortages?
  • What working capital is required? Days receivable from insurance carriers vs commercial clients?
  • What local permits, DSHS mold licenses, and IICRC certifications are held and transferable?
  • What is facility lease status—term remaining, rate, square footage, and renewal options?
02 — Financial Analysis

Reconstructed P&L

Estimated Income Statement
Line Item Amount % Revenue Benchmark
COGS (Materials) –$1,836,524 30.0% Industry avg: 30.0%
Direct Labor –$2,142,611 35.0% Industry avg: 35.0%
Gross Profit $2,142,611 35.0% Calculated
Vehicle / Fleet –$183,652 3.0% Industry range: 2-5%
Insurance (GL, WC, Auto) –$153,044 2.5% Industry range: 2-4%
Office / Admin / Software –$122,435 2.0% Industry range: 1-3%
Marketing –$61,217 1.0% Industry range: 0.5-3%
Rent / Facilities –$122,435 2.0% Industry range: 1-4%
Other Overhead –$91,826 1.5% Industry range: 1-3%
Depreciation –$24,487 0.4% Industry range: 0.3-0.5%
EBITDA (Est.) $1,408,002 23.0% Benchmark: 15–20% healthy
Estimated SDE ~$1,588,002 25.9%

SBA Financing Model

Estimated SDE of ~$1,588,002 can support SBA 7(a) debt service on a $6,000,000 acquisition. Assuming 10% down ($600,000) and a 10-year term at ~10.5% SBA rates, annual debt service is approximately $874,379. Estimated pre-tax income to owner: ~$713,623+ after debt service.

03 — Working Capital & Seasonality

Cash Flow Reality Check

$734,610 (12% of revenue)
Est. Working Capital Needed
$1,028,454 (during Jun-Aug hurricane season peak when AR balloons from large commercial insurance claims)
Peak Capital Requirement
Medium
Seasonality Risk
Monthly Revenue Seasonality (1.0 = Average Month)
Jan
0.85x
Feb
0.85x
Mar
0.95x
Apr
1.05x
May
1.10x
Jun
1.15x
Jul
1.15x
Aug
1.10x
Sep
1.05x
Oct
0.95x
Nov
0.85x
Dec
0.85x

Cash Conversion Cycle

Days Receivable
45 days (insurance carriers 50-60 days, commercial clients 30-35 days)
Days Payable
25 days (materials and subcontractor payments)
Net Cash Cycle
20 days net
Assessment
Industry benchmark 15-25 days; company is within normal range but opportunity to improve insurance carrier collection to reduce working capital needs

Working Capital Recommendations

  • Establish $1.1M Revolving Credit Facility: Secure working capital line to cover peak hurricane season AR (Jun-Sep) when large commercial projects create 60-90 day payment cycles from insurance carriers. Structure with seasonal advance rate (85% of eligible AR <60 days) and covenant holiday during peak season.
  • Implement Accelerated AR Collection Process: Hire dedicated insurance billing specialist to manage carrier claims, reduce days receivable from estimated 45 to 30-35 days. Implement weekly AR review meetings, early payment discounts for commercial clients, and electronic invoicing with carrier portals.
  • Build Winter Season Commercial Pipeline: Develop preventative maintenance contracts with multifamily and commercial property managers to smooth Nov-Feb revenue valley. Target 15-20 contracts generating $40K-$60K monthly recurring revenue during slow season.
  • Optimize Inventory Management for Hurricane Prep: Pre-position $150K-$200K of critical supplies (drying equipment, dehumidifiers, air movers, containment materials) in May-June to avoid supply chain disruptions during major weather events. Negotiate vendor consignment or 90-day payment terms.
04 — Revenue Quality

How Sticky Is the Revenue?

Revenue Breakdown by Type
Emergency Mitigation (Insurance) (Recurring) 55%
Commercial Restoration Projects (Repeat) 20%
Residential Restoration (One-Time) 15%
Reconstruction and Rebuild (One-Time) 10%

Customer Concentration (Est.)

Top 1 Customer
~8%
Top 5 Customers
~20%
Top 10 Customers
~30%
Concentration Risk: Low — Commercial concentration creates moderate risk if key property managers or insurance programs don't transfer, but diversified insurance carrier base and large Houston metro market provide mitigation. Estimate 200+ annual clients across commercial and residential segments.

Revenue Retention Estimate: 75-85% annual retention on commercial accounts; insurance carrier programs provide continuous referral flow regardless of specific customer retention. Residential is largely one-time emergency work (water/fire damage) with limited repeat business.

Estimated percentage of revenue retained after an ownership transition, based on industry benchmarks and business characteristics.

Churn Risk Factors

Insurance Carrier Program Loss (Low likelihood)
Mitigation: Franchise brand provides national carrier relationships and program access; transfer risk mitigated by IICRC certifications and performance history. Verify program participation and re-credentialing requirements during due diligence.
Key Commercial Client Concentration (Medium likelihood)
Mitigation: Top 5 commercial accounts likely represent 15-20% of revenue. Require seller to introduce buyer to key property managers and execute transition communication plan. Consider 6-month seller consulting agreement to support relationship handoff.
Management Team Departure (Medium likelihood)
Mitigation: Absentee operations depend on experienced management team. Implement retention bonuses for general manager and key supervisors tied to 12-month employment and performance targets. Document all operational processes and insurance carrier contacts.
Franchise Termination or Non-Renewal (Low likelihood)
Mitigation: Review franchise agreement for transfer approval requirements, good standing status, and renewal terms. Verify no outstanding franchise violations or fee arrears. Budget for transfer fees and potential working capital requirements.
Competitive Displacement by PE-Backed Platforms (Medium likelihood)
Mitigation: BluSky and other PE platforms aggressively acquiring regional operators and expanding insurance program access. Differentiate through superior response times, local market knowledge, and commercial relationship depth. Consider joining buying group for equipment/supply cost advantages.
03 — Valuation Assessment

What's This Business Worth?

Valuation Triangulation
Method Low Mid High
SDE Multiple (Reconstructed) $4,448,805 $4,764,006 $5,079,207
SDE Multiple (If Reported Accurate) $7,148,844 $7,659,444 $8,170,044
EBITDA Multiple $4,928,007 $5,624,008 $6,320,009
Revenue Multiple $4,897,497 $5,509,246 $6,120,995
Blended Fair Value
$4.5M-$5.1M (reconstructed) or $7.1M-$8.2M (if reported SDE verified)

Premium Factors

Strong commercial insurance relationships
8%
Absentee-ready with experienced management team
9%
Houston metro market scale and disaster frequency
7%
National franchise brand and program access
6%

Discount Factors

Substantial gap between reported and reconstructed SDE
9%
Franchise dependency limits operational control and margins
7%
Commercial client concentration risk unknown
6%
Limited financial disclosure (no P&L, EBITDA, or backlog)
8%
04 — Market Context

Market & Comparable Transactions

Harris County restoration market benefits from humid climate, hurricane/flood exposure, and robust construction activity ($6.5B+ new construction value, 16K home starts in 2026). Market structure is fragmented with 50-150+ competitors including Servpro (Blackstone-backed, 2,200+ locations), 911 Restoration, and PE-backed consolidators like BluSky actively acquiring regional operators. Insurance carrier program relationships provide competitive moat. Skilled labor shortages (75% of Texans report rebuilding challenges, 91% of employers struggle to find qualified candidates) create wage pressure but limit new entrant threats.

ComparableRevenueMultipleLocation
American Restoration (Dallas HQ platform) acquired by Morgan Stanley Capital Partners from Soundcore Capital PartnersNot disclosedNot disclosedDallas-Ft. Worth metro
Water restoration and mold remediation business in Maine$750K2.5-3.0x SDE (estimated)Southern Maine
Diversified restoration business with TPA participation and carrier program relationships$3M EBITDA6.5x-8.0x EBITDATexas (2024-Q2 2026)

Bull Case

If reported $2.55M SDE is accurate, business trades at reasonable 2.4x SDE multiple for premium franchise with transferable insurance relationships. Houston metro population growth and disaster frequency provide consistent demand tailwinds. Commercial focus (70%+ revenue) offers larger project sizes and recurring insurance referrals. Multiple underdeveloped channels (residential marketing, reconstruction conversion, additional service lines) present organic growth without capital investment. Experienced management team enables buyer to acquire cash flow without operational burden. Skilled labor shortages create barriers to entry protecting market share.

Bear Case

Asking price at 3.8x reconstructed SDE assumes significant owner add-backs that may not transfer. Franchise model limits operational control and margin expansion (royalties, marketing fees, restricted suppliers). Commercial client concentration creates revenue volatility if key property managers or insurance programs don't transfer. Hurricane dependency cuts both ways—major events create revenue surges but also supply chain disruptions and labor shortages. PE consolidation (BluSky, American Restoration under Morgan Stanley) may pressure local pricing. Skilled labor shortages drive wage inflation and crew retention challenges. Limited residential presence (30% revenue) leaves growth dependent on commercial market cycles.

06 — Competitive Landscape

Who You're Up Against

50-150+ competitors (fragmented market with mix of large franchises, established independents, and smaller single-crew operations serving Houston metro)
Est. Local Competitors
Fragmented
Market Structure
Moderate - Servpro dominates with 2,200+ US locations (likely 15-20 in Houston metro), 911 Restoration and Restoration 1 have multi-location presence, but significant independent operator share remains
Franchise Penetration
Key Local Competitors
Company Type Est. Revenue Threat Level
Servpro (Blackstone-backed) Franchise $4B+ system-wide ($2M-$5M per Houston location estimate) Largest market share with national brand recognition, insurance carrier program dominance, and PE capital for aggressive expansion. Primary competitive threat for residential and insurance program work.
911 Restoration Franchise $300M+ system-wide ($1M-$3M per location estimate) Ranked among top restoration companies nationally with active franchise expansion in Texas markets. Competes directly for insurance programs and commercial accounts with 24/7 emergency response positioning.
Best Option Restoration / Restoration 1 Franchise $1M-$2M per location estimate Regional franchise operators with multiple Houston-area locations offering full water, fire, and mold services. Mid-tier threat for commercial and residential market share.
Mundae Independent $3M-$8M estimate (30+ year family-owned operation) Established Houston-based independent with deep commercial and insurance relationships. Demonstrates viability of non-franchise model and represents quality independent competition for commercial accounts.
BluSky Restoration PE-Backed $200M+ consolidated platform Most active PE consolidator acquiring regional restoration operators. Primary acquirer threat and competitive risk as platform scales purchasing power, insurance access, and geographic coverage. Could acquire local competitors or pursue this target.

Competitive Advantages

Established Commercial Insurance Relationships
Strong
National Franchise Brand and Program Access
Moderate
Experienced Management Team and Absentee Operations
Moderate
Large Metropolitan Market Scale
Strong
Hurricane/Flood-Prone Geography
Strong

Moat Assessment

Moderate competitive moat derived primarily from insurance carrier program relationships and commercial client switching costs. Franchise affiliation provides access to national insurance programs (State Farm, Allstate, Liberty Mutual networks) that independent operators struggle to penetrate. Commercial property manager relationships exhibit stickiness due to certification requirements (IICRC), emergency response protocols, and performance history. However, moat durability threatened by PE consolidation creating larger platforms with superior insurance access, purchasing power, and multi-market capabilities. Residential segment highly competitive with low switching costs and limited differentiation beyond response time and brand recognition. Key moat sustainability depends on maintaining insurance program standing and deepening commercial account penetration through superior service quality and local market knowledge that national platforms cannot easily replicate.

05 — Risk Assessment

Risk Scores & Due Diligence

5.5
Market Risk
Medium — HVAC is essential in Las Vegas
5.5
Operational Risk
Medium — Labor + owner dependency unknown
3.0
Financial Risk
High — Estimated financials only

Due Diligence Priorities

  • 1. Financial Reconciliation: Obtain 3 years tax returns, P&Ls, and detailed owner add-back schedules to reconcile $966K gap between reported $2.55M SDE and reconstructed $1.59M SDE.
  • 2. Customer Concentration Analysis: Request customer list showing revenue by client for past 24 months. Identify top 10 accounts, contract terms, and relationship transferability risk.
  • 3. Franchise Agreement Review: Obtain franchise disclosure document (FDD), current franchise agreement, royalty structure, renewal terms, transfer fees, and territory exclusivity details.
  • 4. Insurance Program Verification: Document all insurance carrier relationships, TPA program participation, referral volume by source, and transferability requirements or re-credentialing processes.
  • 5. Equipment and Asset Inspection: Physical inspection and valuation of all drying equipment, demolition tools, moisture detection technology, vehicles, and assessment of remaining useful life.
  • 6. Labor and Org Chart Review: Obtain org chart, W-2 vs 1099 breakdown, wage rates, turnover data, key employee contracts, and assess retention risk post-transaction.
  • 7. Working Capital and AR Analysis: Review AR aging, days to payment by insurance carrier vs commercial client, WIP schedule, and historical cash conversion cycle.
  • 8. License and Permit Audit: Verify all DSHS mold licenses, IICRC certifications, local permits, insurance policies (GL, WC, auto), and confirm transferability.
  • 9. Facility Lease Review: Obtain lease agreement, verify term remaining, rent escalations, renewal options, assignability clause, and landlord consent requirements.
  • 10. Backlog and Pipeline Assessment: Review current project backlog, average project size and margin by type (water, fire, mold, reconstruction), and sales pipeline quality.
08 — Transfer Checklist

What Needs to Transfer

$108,200-$240,500
Total Estimated Transfer Cost
$108,200-$240,500 (plus franchise transfer fee of $15K-$40K)
90-120 days
Estimated Time to Complete
90-120 days for complete transfer (franchise approval and insurance carrier re-credentialing are critical path items)
Deal Transfer Checklist
✓
License DSHS Mold Remediation Contractor License Critical
Cost: $500-$1,000 Time: 4-6 weeks Required for mold assessment and remediation services in Texas. Must apply for new license under buyer entity with designated responsible party meeting DSHS qualifications. Verify current license in good standing.
✓
License IICRC Certifications (WRT, ASD, FSRT, AMRT) Critical
Cost: $2,000-$5,000 Time: 2-4 weeks Water Restoration Technician, Applied Structural Drying, Fire & Smoke Restoration, Applied Microbial Remediation certifications tied to individual technicians, not company. Ensure key employees maintain certifications and budget for new buyer/manager certification if needed.
✓
License Local Business Permits and Occupancy
Cost: $200-$500 Time: 1-2 weeks Harris County and city-level business permits and certificate of occupancy for facility. Verify no outstanding code violations.
✗
Insurance General Liability Insurance ($2M-$5M) Critical
Cost: $15,000-$25,000 annually Time: 2-3 weeks Must obtain new GL policy under buyer entity. Restoration industry requires high limits due to property damage exposure. Budget for potential premium increase if buyer has limited insurance history.
✗
Insurance Workers Compensation Insurance Critical
Cost: $40,000-$80,000 annually (6-8% of payroll) Time: 2-3 weeks High-risk classification for restoration work drives elevated WC premiums. Obtain quotes pre-close and verify seller's loss history/experience mod. Safety program quality impacts premium.
✗
Insurance Commercial Auto Insurance (Fleet) Critical
Cost: $20,000-$35,000 annually Time: 1-2 weeks Coverage for all company vehicles and equipment trailers. Verify vehicle titles transfer and obtain new policy under buyer entity.
✗
Insurance Pollution Liability / Environmental Insurance Critical
Cost: $5,000-$10,000 annually Time: 2-4 weeks Covers mold, asbestos, and environmental contamination exposure. Many insurance carrier programs require this coverage for panel participation.
✓
Contract Franchise Agreement Transfer Critical
Cost: $15,000-$40,000 (typical transfer fee) Time: 60-90 days Franchisor must approve buyer, conduct background check, verify financial capacity, and may require training. Review FDD Item 6 for transfer fee (typically 25-50% of initial franchise fee). Confirm no outstanding violations or fee arrears.
✓
Contract Insurance Carrier Program Agreements Critical
Cost: $0-$5,000 Time: 30-60 days per carrier State Farm, Allstate, Liberty Mutual, and other carrier programs require re-credentialing under new ownership. Franchise affiliation may expedite but not guarantee approval. Verify current program participation and performance metrics.
✓
Contract TPA (Third Party Administrator) Panel Approvals Critical
Cost: $0-$2,000 Time: 30-45 days per TPA Crawford, Sedgwick, and other TPAs manage carrier claims and contractor panels. Re-application required under buyer entity with insurance verification, background check, and reference checks.
✓
Contract Facility Lease Assignment Critical
Cost: $0-$5,000 Time: 30-45 days Obtain landlord consent for lease assignment or new lease under buyer entity. Review assignability clause, verify term remaining, and confirm no outstanding lease violations or deferred maintenance.
✓
Contract Commercial Client Contracts
Cost: $0 Time: 15-30 days Property manager and commercial client master service agreements may require consent to assign or notice of ownership change. Review top 10 customer contracts for assignment provisions.
✓
Contract Equipment Leases / Financing Agreements
Cost: $0-$3,000 Time: 15-30 days If equipment is leased or financed, obtain lessor/lender consent for assumption or payoff balances at close. Verify no encumbrances on titled vehicles.
✓
Contract Vendor and Supplier Accounts
Cost: $0 Time: 15-30 days Establish new accounts under buyer entity with key material suppliers, equipment vendors, and subcontractors. May require new credit applications and personal guarantees until business credit established.
✓
Regulatory EPA Lead-Safe Certification (if pre-1978 properties)
Cost: $500-$1,000 Time: 1-2 weeks Required for renovation work on pre-1978 residential properties. Firm certification and individual renovator certifications needed. Verify current compliance if company performs reconstruction work.
✓
Regulatory OSHA Compliance and Safety Programs Critical
Cost: $2,000-$5,000 Time: 30-60 days Confined space entry, respiratory protection, hazard communication, and injury/illness prevention programs required. Review current OSHA compliance status and any outstanding citations. Budget for safety consultant if needed.
✓
Regulatory DOT Compliance (if vehicles >10,000 lbs GVWR)
Cost: $1,000-$3,000 Time: 2-4 weeks If company operates commercial vehicles requiring CDL or >10,000 lbs, DOT number and compliance program required. Verify current DOT registration and driver qualification files.
✓
Operational Software and Technology Systems Critical
Cost: $5,000-$15,000 Time: 30-60 days Job management software (likely franchise-provided), moisture mapping tools, Xactimate estimating software, QuickBooks/accounting system. Verify software licenses transfer or budget for new subscriptions under buyer entity. Critical for insurance claim documentation.
✓
Operational Phone Numbers and Web Domain Critical
Cost: $0-$1,000 Time: 1-2 weeks Transfer or forward existing business phone numbers to maintain customer contact continuity. Web domain may be franchise-controlled; verify ownership and transfer process.
✓
Operational Customer Database and Project Files Critical
Cost: $0 Time: Immediate Complete transfer of customer contact database, project history, insurance carrier contacts, and referral source information. Ensure compliance with data privacy requirements during transfer.
✓
Operational Employee Handbook and HR Documentation
Cost: $2,000-$5,000 Time: 30-45 days Update employee handbook under buyer entity name and policies. Review current I-9 compliance, personnel files, and wage/hour compliance. Budget for HR attorney review if employment practices unclear.

Potential Deal Breakers

  • Franchise transfer denial or requirement for buyer to complete full initial training program (4-6 months)
  • Loss of top 3 insurance carrier program approvals during re-credentialing (would eliminate 40-50% of revenue source)
  • Outstanding OSHA citations or mold license violations that prevent license transfer
  • Key management team members refuse to stay post-acquisition (eliminates absentee operations model)
06 — Post-Acquisition Plan

100-Day Integration Playbook

Days 1-30
Stabilization and Relationship Transfer
Secure operations, meet key stakeholders, and begin transferring critical relationships
  • Meet all management team members and key crew leaders; communicate continuity and retention plans
  • Introduce yourself to top 10 commercial clients, insurance carrier program contacts, and property manager relationships
  • Review and sign off on all active projects; understand WIP and backlog composition
  • Verify all licenses, permits, insurance policies, and initiate any transfer or re-credentialing processes
  • Establish banking relationships, transfer vendor accounts, and set up cash management protocols
Days 31-90
Operational Deep Dive and Quick Wins
Validate financial performance, optimize processes, and implement initial improvements
  • Conduct full financial audit comparing actual performance to seller representations; reconcile SDE calculations
  • Implement job costing system to track profitability by project type (water, fire, mold, reconstruction)
  • Assess equipment condition and create replacement/upgrade schedule for critical assets
  • Launch residential lead generation pilot: local SEO optimization, Google My Business, and targeted digital ads
  • Establish weekly management team meetings with KPI dashboards (revenue, backlog, AR aging, crew utilization)
Days 91-180
Growth Initiative Execution
Execute on underdeveloped channels and strengthen competitive position
  • Build dedicated reconstruction team and formalize mitigation-to-reconstruction conversion process
  • Develop targeted business development campaign for multifamily property managers and commercial real estate firms
  • Expand insurance carrier program participation; pursue additional TPA panel approvals
  • Implement labor retention program: performance bonuses, training/certification reimbursement, and career pathing
  • Add underutilized service lines to marketing materials and sales training (contents cleaning, document drying, biohazard)
Days 181-365
Scale and Optimization
Drive sustainable growth and improve operational efficiency
  • Evaluate add-on acquisition opportunities or additional franchise territory expansion
  • Optimize crew deployment using project management software to improve utilization and reduce overtime
  • Formalize training academy for new technicians to combat skilled labor shortages and reduce reliance on external hires
  • Build strategic inventory of critical equipment and materials to mitigate hurricane-driven supply chain disruptions
  • Implement customer feedback system and Net Promoter Score tracking to strengthen referral generation

Value Creation Waterfall (3-Year Outlook)

Acquisition Price
$2.2M
+ Organic Revenue Growth (15%/yr)
+$2.1M Rev
+ Margin Expansion (to 20% EBITDA)
+$250K EBITDA
+ Multiple Expansion (3.5x → 5.5x)
+$2.0M uplift
Est. Enterprise Value (Year 3)
$5.5M – $7.0M
07 — Final Recommendation

Our Verdict

Verdict: Conditional — Proceed to LOI

Conditional Recommendation contingent on financial reconciliation. If reported $2.55M SDE is verified through tax returns and defensible add-backs, business represents strong acquisition at 2.4x SDE with absentee operations and multiple growth levers. However, reconstructed financials suggest fair value of $4.5M-$5.1M, creating $900K-$1.5M valuation gap. Strong market fundamentals, insurance relationships, and experienced team provide solid foundation, but buyer must verify cash flow accuracy and negotiate price adjustment if reported SDE cannot be substantiated.

Recommended Next Steps

  1. Request 3 years business and personal tax returns (Form 1120/1120S and Schedule C/K-1) to reconcile reported vs reconstructed SDE
  2. Obtain detailed P&L by month for past 24 months showing all revenue and expense categories
  3. Request customer list with revenue by account, contract terms, and insurance carrier program participation details
  4. Obtain franchise disclosure document (FDD), franchise agreement, and royalty/fee structure documentation
  5. Schedule on-site visit to inspect equipment, meet management team, and tour facility and vehicles
  6. Submit LOI at $4.75M (3.0x reconstructed SDE) with 45-day due diligence period contingent on financial verification
  7. Engage restoration industry-specialized QoE firm to validate reported cash flow and identify normalized adjustments
  8. Request introduction calls with top 5 commercial clients and 2-3 insurance carrier program contacts to assess relationship strength

Suggested Offer Structure

$4.75M (3.0x reconstructed SDE) with $5.5M earnout potential if seller demonstrates $2.3M+ SDE for 12 months post-close. Structure: $475K down (10%), $4.275M SBA 7(a) loan, $750K earnout paid over 18 months if trailing 12-month SDE exceeds $2.3M threshold. Earnout protects buyer if reported SDE inflated while allowing seller to capture premium valuation if performance verified.

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Sources

BizBuySell listing #2543492 · Harris County construction data and economic indicators · Texas restoration industry regulatory framework (DSHS, TDLR, TCEQ) · Restoration industry comparable transaction data · Texas skilled labor shortage reports and construction workforce analysis · Insurance restoration program market research