Restoration Company Due Diligence Checklist for Buyers
Once a buyer and seller agree on general terms, due diligence is where the buyer confirms what they are actually acquiring. For a restoration company, that means examining not only the financial statements but also where jobs come from, how receivables are collected, what licenses and certifications the company and its people hold, its compliance history, its staff, equipment and insurance. Thorough restoration company due diligence also gives lenders the documentation they need to evaluate the loan.
This checklist is a general guide for buying an existing, operating restoration company. Requirements vary by state, locality and transaction, and buyers should work with qualified attorneys, accountants, insurance and environmental professionals. Nothing here is legal, tax, insurance, regulatory or environmental advice.
Financial Records
- Business tax returns and financial statements for several years, plus year-to-date figures
- Revenue by service type, by month and by referral source
- Job cost reports for completed jobs
- Work-in-progress and unbilled work at the time of review
- Documentation for every proposed add-back or owner adjustment
- All existing debt, leases and liens, including any merchant cash advances or other financing
Our guide to restoration company valuation explains how these records feed into value.
Referral Sources and Customers
- Revenue by referral source and largest customers over several years
- Any program or preferred-vendor agreements and their terms, including what happens on a change of ownership
- Commercial client contracts and their assignment provisions
- Which relationships run through the owner personally
See our article on restoration referral sources.
Receivables
- Accounts receivable aging by payer type
- History of reductions, disputes and write-offs
- Collection practices and documentation standards
Our guide to restoration receivables explains what to look for.
Licensing, Certifications and Compliance
- Business, contractor and remediation licenses where required, and who holds them
- Employee training and certifications
- Any regulatory inquiries, complaints or violations
- Policies and records for remediation and other regulated work, reviewed with qualified professionals
- Franchise agreements, if applicable, including transfer approval requirements
See our article on remediation business compliance.
Staff
- Employee roster with roles, tenure, certifications and pay
- On-call and overtime practices
- Subcontractors used, especially for reconstruction, and their agreements
- How workers and subcontractors are classified, which should be reviewed with qualified professionals
See our guide to restoration employee retention.
Equipment, Vehicles and Facilities
- Drying, extraction and cleaning equipment, with condition and any liens
- Vehicles with titles and condition
- Facility lease or ownership, including any contents storage areas
Insurance and Legal
- Current insurance policies and claims history, reviewed with an insurance professional
- Pending or threatened lawsuits, disputes or customer complaints
- Customer contract forms, reviewed by counsel
What Lenders Will Request
Lenders typically want tax returns, financial statements, receivables aging, a debt schedule, the purchase agreement, licensing details and information about the buyer’s experience. Organizing these materials early can help the financing process, though timing depends on the lender and the transaction.
US Professional Funding helps buyers finance the acquisition of existing, operating restoration companies. Learn more about our restoration business acquisition financing.
