High-Performing Restoration Business in Rapid Growth Market
Full acquisition analysis: financials, market context, valuation, risk assessment, and 100-day integration plan.
View Original Listing ↗At a Glance
Independent full-service restoration company serving Iron County with water mitigation, fire/smoke restoration, mold remediation, contents handling, and reconstruction. Revenue generated through TPA programs, insurance referrals, repeat customers, and organic marketing. Business is SBA pre-qualified with owned real estate ($1.12M) included in asking price. Leadership team in place but details undisclosed.
Key Strengths
- Independent platform — no franchise fees or restrictions on service territory, pricing, or vendor selection
- Diversified revenue channels — TPA programs, insurance referrals, repeat customers, and organic marketing reduce dependency risk
- High-growth market — Iron County population up 48.79% since 2010, 2.15% annual growth driving construction and restoration demand
- Owned real estate — eliminates lease risk and provides asset backing, included at $1.12M of $2.52M asking price
- Strong reconstructed margins — Est. 35% gross profit and 28% SDE margin indicate operational efficiency
- SBA pre-qualified — seller has completed preliminary lender vetting, streamlining acquisition financing
- Full-service offering — mitigation, contents, and reconstruction create upsell opportunities and higher average job values
Key Questions
- What is the actual leadership team structure, tenure, and compensation? Listing references 'highly talented leadership' but provides no specifics on GM, estimator, project manager roles
- What are the TPA program terms and revenue concentration? Which TPAs (Sedgwick, Crawford, Alacrity)? Contract terms? Percentage of revenue from top 3 programs?
- What insurance carrier relationships exist? Direct carrier referrals vs. TPA-driven work? Any preferred vendor agreements? Renewal rates on recurring customers?
- What is the actual customer concentration? Top 1, 5, 10 customer percentages? Any single customer >15% of revenue creates material risk
- Why is reported SDE only $414K vs. reconstructed $825K? What owner add-backs are included? What normalized expenses are excluded?
- What is the fleet composition and condition? How many vehicles? Average age? Replacement capex needs? Maintenance history?
- What is the employee count, turnover, and key person risk? Technician count? Office staff? Any non-compete agreements?
- What software and systems are in place? Restoration management software (Xactimate, dashboards)? CRM? Accounting systems?
- What is the backlog and pipeline visibility? Current signed contracts? Average job completion time? Seasonal demand patterns?
- What licenses and certifications does the company hold? IICRC certifications? State contractor licenses? Lead-safe certifications?
- What is the actual working capital requirement? A/R aging? Typical insurance payment timelines? Any factoring arrangements?
- What growth investments are needed post-close? Marketing spend? Additional technician hiring? Equipment upgrades?
Reconstructed P&L
| Line Item | Amount | % Revenue | Benchmark |
|---|---|---|---|
| COGS (Materials) | –$880,502 | 30.0% | Industry avg: 30.0% |
| Direct Labor | –$1,027,252 | 35.0% | Industry avg: 35.0% |
| Gross Profit | $1,027,253 | 35.0% | Calculated |
| Vehicle / Fleet | –$88,050 | 3.0% | Industry range: 2-5% |
| Insurance (GL, WC, Auto) | –$73,375 | 2.5% | Industry range: 2-4% |
| Office / Admin / Software | –$58,700 | 2.0% | Industry range: 1-3% |
| Marketing | –$29,350 | 1.0% | Industry range: 0.5-3% |
| Rent / Facilities | –$58,700 | 2.0% | Industry range: 1-4% |
| Other Overhead | –$44,025 | 1.5% | Industry range: 1-3% |
| Depreciation | –$11,740 | 0.4% | Industry range: 0.3-0.5% |
| Est. Net Profit (before owner) | $663,413 | 22.6% | Calculated |
| Owner Salary Add-Back | $150,000 | 5.1% | $2M-$5M revenue range |
| Depreciation Add-Back | $11,740 | 0.4% | Non-cash expense |
| EBITDA (Est.) | $675,053 | 23.0% | Benchmark: 15–20% healthy |
| Estimated SDE | ~$825,053 | 28.1% |
SBA Financing Model
Estimated SDE of ~$825,053 can support SBA 7(a) debt service on a $2,520,000 acquisition. Assuming 10% down ($252,000) and a 10-year term at ~10.5% SBA rates, annual debt service is approximately $367,239. Estimated pre-tax income to owner: ~$457,814+ after debt service.
Cash Flow Reality Check
Cash Conversion Cycle
Working Capital Recommendations
- Establish Line of Credit: Secure $200K LOC to cover summer peak working capital needs (Jun-Aug 15% above baseline) and manage 45-day insurance payment cycles without cash flow strain.
- Accelerate A/R Collections: Implement weekly A/R aging review with follow-up on invoices >30 days. Negotiate faster payment terms with top 5 TPA programs (target 30-day vs. 45-day DSO). Consider selective factoring for large commercial jobs >$50K.
- Optimize Inventory Management: Maintain minimum 2-week supply of fast-moving materials (dehumidifiers, fans, PPE) but avoid overstocking seasonal items. Negotiate vendor payment terms to 25-30 days to align with cash conversion cycle.
- Build Cash Reserves: Target $100K cash reserve (3 months operating expenses) to buffer against seasonal fluctuations and provide runway for growth investments. Allocate excess summer cash flow to reserve account vs. owner distributions.
How Sticky Is the Revenue?
Customer Concentration (Est.)
Revenue Retention Estimate: 70-75% annual retention (TPA programs + repeat commercial accounts provide base, offset by one-time residential emergency work)
Estimated percentage of revenue retained after an ownership transition, based on industry benchmarks and business characteristics.
Churn Risk Factors
What's This Business Worth?
| Method | Low | Mid | High |
|---|---|---|---|
| SDE Multiple | $2,310,148 | $2,475,159 | $2,640,169 |
| EBITDA Multiple | $2,362,685 | $2,700,212 | $3,375,265 |
| Asset-Backed Floor | $1,800,000 | $2,000,000 | $2,200,000 |
Premium Factors
Discount Factors
Market & Comparable Transactions
Iron County restoration market benefits from strong demographic tailwinds (2.15% annual population growth, 48.79% increase since 2010) and steady construction activity. County population of 68,838 supports 12-18 local competitors in a fragmented market with 15-25% franchise penetration. National restoration market hit $7.1B in 2025 with 5.3-5.8% CAGR driven by water damage (50% of revenue) and fire/smoke restoration (43%). PE has deployed $6B+ across 50+ platforms since 2018, with quality $5M+ operators commanding 4x-7x EBITDA vs. 2.8-3.0x SDE for sub-$2M shops. Small county population necessitates multi-county service territory including Washington County to the south. Insurance-driven market with TPA relationships and carrier networks critical for revenue generation.
| Comparable | Revenue | Multiple | Location |
|---|---|---|---|
| Sub-$2M restoration shops in fragmented markets | $1M-$2M | 2.8-3.0x SDE | National |
| Quality restoration operators with diversified service mix | $5M+ | 4.0-7.0x EBITDA | National (PE-backed) |
| Utah Disaster Kleenup (acquired by American Restoration Operations) | Not disclosed | Not disclosed | Draper, UT |
Bull Case
Independent restoration platform in high-growth Utah market captures expanding demand from 2.15% annual population growth and strong housing development. Diversified revenue channels (TPA programs, insurance referrals, repeat customers, organic marketing) provide stability and reduce dependency risk. Owned real estate ($1.12M included) eliminates lease risk and provides asset backing for SBA financing. Est. 28% SDE margin ($825K on $2.94M revenue) indicates operational efficiency. Full-service offering (mitigation, contents, reconstruction) creates upsell opportunities and higher job values. SBA pre-qualification streamlines financing. Multi-county service territory expands addressable market beyond Iron County's 68K population. Proposed AI data center could bring 670 jobs and lower property taxes 55%. Regional consolidation opportunity as PE continues deploying capital at 4x-7x EBITDA for quality operators. Leadership team in place reduces transition risk.
Bear Case
Critically insufficient information creates material due diligence risk — no org chart, employee details, customer concentration data, or financial documentation beyond top-line revenue. $411K gap between reported SDE ($414K) and reconstructed SDE ($825K) unexplained and suggests either aggressive add-backs or undisclosed expenses. Small market population (68,838) limits organic growth potential and requires multi-county expansion to scale. Rural Utah location reduces exit liquidity and strategic buyer interest vs. major metros. Fragmented market with established franchise competitors (SERVPRO, ServiceMaster Restore) and insurance-driven pricing (standardized price lists cover 90% of claims) limits pricing power. No disclosed backlog or pipeline visibility creates revenue uncertainty. Asking price of $2.52M at 3.05x reconstructed SDE represents 8-17% premium to fair value range. Working capital requirement of $352K plus $252K down payment creates $604K total cash need. Labor shortage (500K+ skilled workers nationally) threatens scalability.
Who You're Up Against
| Company | Type | Est. Revenue | Threat Level |
|---|---|---|---|
| SERVPRO of Cedar City / Fillmore | Franchise | $500K-$1.5M | High — Largest national franchise with 2,000+ locations, established insurance carrier relationships, 24/7 infrastructure, preferred vendor status with major carriers. Brand recognition drives consumer preference. |
| ServiceMaster Restore of Color Country | Franchise | $400K-$1.2M | High — National brand with comprehensive service suite, insurance partnerships, established market presence. Competes directly on commercial accounts and insurance referrals. |
| Dixie Restoration & Carpet Cleaning | Independent | $300K-$800K | Moderate — Local operator since 2002 with 17+ years experience, deep community relationships, owner-operator model. Competes on personalized service and local knowledge. |
| Service King of Cedar City | Independent | $250K-$700K | Moderate — Locally owned with 24/7 emergency services, integrated cleaning and restoration. Competes on fast response times and community presence. |
| Roto-Rooter Plumbing & Water Cleanup | Franchise | $200K-$600K | Moderate — National brand primarily focused on plumbing but includes water damage services. Captures overflow work and plumbing-related restoration jobs. |
Competitive Advantages
Moat Assessment
Moderate moat driven by relationship capital rather than structural advantages. Restoration industry is highly fragmented (50K+ operators nationally, top 4 companies <20% market share) with low barriers to entry for qualified technicians. In Iron County's small market (68K population), competitive positioning depends on: (1) insurance relationships — TPA program status and direct carrier partnerships drive 70% of revenue but are relationship-dependent and transferable to competitors, (2) service quality and response time — critical for retention but easily replicated by well-capitalized entrants, (3) independent status — provides pricing flexibility and vendor selection freedom vs. franchise constraints, creating structural advantage in margin optimization. Key vulnerability is insurance-driven pricing where standardized Xactimate price lists govern 90% of claims, limiting pricing power across all competitors. Long-term moat sustainability requires continuous investment in reputation, service quality, and relationship management rather than durable structural barriers.
Risk Scores & Due Diligence
Due Diligence Priorities
- 1. Financial Documentation Verification: Obtain 3 years audited or reviewed financials, tax returns, P&L by month, balance sheets, and reconciliation of $411K gap between reported ($414K) and reconstructed SDE ($825K). Verify owner add-backs and one-time expenses.
- 2. Customer Concentration Analysis: Obtain customer list with revenue by customer for past 3 years. Calculate top 1, 5, 10 customer percentages. Any customer >15% creates material risk. Verify TPA program terms, renewal dates, and revenue mix.
- 3. Insurance Relationships Audit: Document all TPA contracts (Sedgwick, Crawford, Alacrity, etc.), direct carrier relationships, preferred vendor agreements, and referral sources. Verify transferability of programs and contracts post-close.
- 4. Management Team Assessment: Interview leadership team (GM, estimator, project managers). Verify tenure, compensation, non-compete agreements, and post-close retention plans. Assess key person risk and succession planning.
- 5. Employee & Labor Structure: Obtain employee census with roles, tenure, compensation, and turnover data. Verify technician certifications (IICRC), unemployment claims history, workers' comp experience mod, and union presence.
- 6. Working Capital & Cash Flow Analysis: Analyze A/R aging, typical insurance payment cycles (45-day DSO), inventory levels, and any factoring arrangements. Verify $352K working capital estimate and peak capital needs during summer season.
- 7. Real Estate & Asset Verification: Obtain property appraisal, title report, environmental Phase I, and property tax records for owned facility ($1.12M value). Inspect fleet vehicles, equipment, and verify condition and replacement capex needs.
- 8. License & Regulatory Compliance: Verify Utah contractor license (DOPL), IICRC certifications, EPA lead-safe certification, general liability insurance ($100K/$300K minimum), workers' comp coverage, and surety bonds ($15K-$50K).
- 9. Technology & Systems Review: Assess restoration management software (Xactimate required for insurance billing), CRM, accounting systems, project management tools, and data backup procedures. Verify integration and transferability.
- 10. Competitive Position Validation: Interview local insurance adjusters, TPA representatives, and suppliers to assess reputation, service quality, and competitive positioning vs. SERVPRO, ServiceMaster Restore, and independent operators.
What Needs to Transfer
Potential Deal Breakers
- Inability to obtain Utah contractor license (DOPL) — new owner must qualify or hire licensed operator
- TPA program non-transferability — if major programs (>15% revenue each) cannot transfer, deal economics fail
- Workers' comp experience mod >1.3 — indicates poor safety record and will materially increase insurance costs
- Outstanding OSHA violations or pending regulatory actions — material liability exposure and operational disruption risk
100-Day Integration Playbook
- Execute retention bonuses for GM and key project managers ($30K-$50K total)
- Accompany seller on customer visits to top 10 accounts and TPA regional managers
- Shadow field operations (ride-alongs) to understand workflow and technician capabilities
- Review and approve all jobs >$25K to maintain quality control during transition
- Establish weekly leadership team meetings to monitor KPIs and address issues
- Complete formal introductions to all TPA account managers and insurance adjusters
- Document standard operating procedures for mitigation, contents, and reconstruction workflows
- Implement daily dashboard tracking job status, revenue, and margin by service line
- Assess technician certification gaps and schedule IICRC training for Q3
- Review pricing vs. Xactimate price lists and adjust margins where competitive position allows
- Evaluate fleet condition and schedule maintenance/replacement for underperforming vehicles
- Implement CRM system to track referral sources and automate follow-up with insurance contacts
- Launch local SEO campaign targeting 'water damage restoration Iron County' and adjacent markets
- Develop partnership strategy for plumbers, property managers, and HOAs to drive direct referrals
- Assess expansion feasibility into Washington County (St. George metro) with additional technician hiring
- Evaluate reconstruction division profitability and consider expanding higher-margin service line
- Establish quarterly business reviews with top 3 TPA partners to strengthen relationships
- Hire 2-3 additional technicians if Washington County expansion validated (target $500K incremental revenue)
- Evaluate tuck-in acquisition opportunities in adjacent counties to expand service territory
- Implement performance-based compensation for technicians to reduce turnover and improve productivity
- Develop commercial marketing strategy targeting property management companies and multi-family housing
- Assess financing options for fleet expansion if growth initiatives gain traction
- Build financial reporting package to support future exit at 4x-7x EBITDA (requires scaling to $5M+ revenue)
Value Creation Waterfall (3-Year Outlook)
Our Verdict
Verdict: Conditional — Proceed to LOI
CONDITIONAL RECOMMENDATION with material due diligence requirements. This independent restoration platform presents an attractive acquisition opportunity in a high-growth Utah market with diversified revenue channels and owned real estate. However, critically insufficient information disclosure creates material risk. Proceed ONLY if seller provides: (1) 3 years audited financials with reconciliation of $411K SDE gap, (2) customer concentration analysis showing no customer >15%, (3) complete employee census with retention agreements, (4) documented TPA contracts with transferability confirmation, and (5) leadership team details with post-close retention commitments. Asking price of $2.52M represents 8-17% premium to fair value range ($2.31M-$2.64M). Recommend initial offer of $2.30M ($1.18M business + $1.12M real estate) at 2.79x reconstructed SDE, contingent on full financial documentation and customer concentration verification.
Recommended Next Steps
- Request CIM with 3 years tax returns, P&L by month, balance sheets, and owner add-back schedule
- Demand customer list with revenue by account for past 3 years to calculate concentration metrics
- Obtain TPA contract copies, insurance carrier agreements, and referral source documentation
- Request employee census with roles, tenure, compensation, certifications, and turnover history
- Schedule management team interviews with GM, lead estimator, and project managers
- Retain local Utah CPA familiar with restoration accounting to audit financial reconstruction
- Engage restoration industry consultant to validate market positioning and competitive assessment
- Submit LOI at $2.30M ($1.18M business + $1.12M real estate) with 60-day due diligence period
- Arrange site visit to inspect facility, fleet, equipment, and shadow field operations
- Consult with SBA lender to confirm pre-qualification status and financing terms
Suggested Offer Structure
$2.30M all-cash ($1.18M business value at 2.79x SDE + $1.12M real estate), structured as $230K down payment (10%), $2.07M SBA 7(a) loan, with 60-day due diligence period contingent on financial documentation verification, customer concentration <15% for any single customer, and leadership team retention agreements. Include 90-day seller transition consulting at $10K/month.
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Related Resources
Sources
BizBuySell Listing #2488370 · Iron County demographic and economic data (2026) · U.S. restoration industry market research (2025) · Utah Division of Professional Licensing (DOPL) contractor requirements · Local competitive research (SERVPRO, ServiceMaster Restore, independent operators) · PE transaction comps and valuation multiples (Restoration Brokers of America)