How to sell your restoration and mitigation company

Construction companies are notoriously hard to sell due to their dependence on commodity prices and economic cycles. It can be frustrating because there is no clear guidance on how to sell your company or how to raise capital for business in the construction and restoration industries. Case in point, a number of steel fabrication businesses lost money in 2021 when they were forced to honor fixed-price construction contracts despite steel price increases to levels not seen since January 2011 due to COVID restrictions, supply chain issues, and reduced Chinese steel production.

Buyers of businesses look for stable companies that do well in good and bad economic conditions. Restoration from fire and water damage businesses are characterized by events rather than economic cycles and are generally more stable than conventional construction businesses, thus more attractive to both strategic and financial buyers. If you have one of these businesses, we know how to sell your business

The starting point for every sale is financial information. Unless the business owner has reviewed or audited financial statements, we often recommend that they obtain a quality “financial statement” report from a credible regional or national accounting firm. The better recognized the firm is, the more credibility that the financial statements will have. Many of our M&A clients do not prioritize maintaining proper accounting statements, and it often becomes an obstacle to getting the business sold.

Identifying growth potential is a crucial factor for a buyer to consider since buyers will often look to leverage the purchased business with debt, and growth can repay the debt and earn a return. In the remediation and restoration business, there is often an opportunity to expand into contiguous states or even nearby cities that are underserved, especially if the seller has experience expanding their business and is willing to stay with it. We’ll help you sell your business or raise capital as you expand your business into a broader market.

While most remediation and restoration companies typically have diversified revenue streams from both third-party insurance administrators and direct commercial and residential clients, some have a dependence on three or four major TPAs and have few options if those sources dry up.  This is one of the reasons many restoration companies are reducing their dependence on TPAs and seeking a more direct business which will demonstrate the recession-resistant nature of an individual company within the broader industry. You want to exercise caution when looking at your customer composition for purposes other than business expansion.

It is critical for owners to have a plan to attract and retain workers. Many companies have had to limit their growth due to the inability to find qualified workers due to the low unemployment rate and the reluctance of employees to come back to work. The restoration business looks to hire people with certifications or people who have the ability to qualify for the certifications in mold remediation and other areas, so the challenges are often greater than for businesses that hire lower-skilled workers.

These are a few of the areas to focus on if you are interested in selling your restoration and remediation business for full value. Help with selling your business or raising capital is what we do. Give us a call to discuss selling your business or raising capital. We can guide you through the sale process as well as help you prepare to go to the market.

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