Outreach to Close: How Restoration Acquisitions Really Get Done

High-level timing (what’s “normal”): From first outreach to close, expect roughly 4–6 months in a focused, efficient, and productive process, with many search processes taking upwards of 12 months (highly dependent on your starting point - big difference between a first-time buyer in the space and a well-known strategic or PE platform).  

But here’s the nuance: The outreach-to-LOI stage is far harder to handicap. Finding a willing seller can happen quickly (especially if your criteria are broad) or it can take months of consistent, exhausting conversations before the right opportunity surfaces. Everything depends on how defined your target profile is, how many quality operators are in your geography, and how actively those owners are thinking about succession.

Below is the step-by-step, with the key workstreams, decisions, and pitfalls that can define success for your acquisition strategy.

1) Strategy, criteria, and mandate

• Define the buy box: markets, revenue/EBITDA range, service mix (mitigation vs. reconstruction), customer channels (carrier/TPA, commercial, residential), CAT /storm exposure tolerance.

• Platform vs. add-on: platform needs leadership depth and scalable infrastructure; add-ons can be lighter if you have a central team ready to absorb them.

• Capital stack: if you’re going the SBA route, maintain open communication with multiple lenders who can move quickly. Each bank applies SBA rules differently, and timelines can vary. If you have equity partners or investors, make sure their investment criteria and approval processes are clearly defined before you engage a seller. And from the outset, define your optimal capital structure: will you need seller financing to bridge a gap? Do you want management to stay on and roll equity? Getting clarity up front avoids surprises later and helps you negotiate from a position of strength.

Restoration nuance: Calibrate how much program/TPA work you want. Program revenue is sticky, but often not automatically transferable and requires buyer re-approval and specific insurance limits (each situation is different). Plan the approval path early.

2) Research & outreach (proprietary and brokered)

• Target map: Build a longlist of potential targets using industry networks, trade associations, vendor directories, LinkedIn, and create your own pipeline. Prioritize by size, geography, service mix, and fit with your strategy.

• Outreach: Market yourself as a serious buyer with a short teaser: who you are, why you’re acquiring, and why you’re a good fit. Use a mix of direct email, calls, brokers/advisors, mailers, social media, and industry contacts.

Pitfall: Don’t underestimate the effort it takes to get engagement. Most owners aren’t thinking about selling the moment you call. Expect multiple touches and a consistent follow-up sequence to get a real conversation started.

3) First-pass analysis & IOI (indication of interest)

• Model “defensible EBITDA”: adjust for owner comp, true one-offs, and recurring items; sanity-check that cash flow tracks EBITDA (collections, timing). Buyers price earnings quality, not just earnings. (You should rigor-test this again in Quality of Earnings - or similar level of deep-dive diligence.)

• Working capital profile: sketch AR/AP/holdbacks behavior to avoid surprises later.

  • Market note: Working-capital adjustments are standard; the peg is commonly based on a normalized TTM average (sometimes 3–6 months if business is shifting). It can swing high six figures at closing—treat it as price.

• Paper and submit and IOI - a non-binding letter that gives the seller your valuation range, proposed structure/financing approach, and next steps with timing. If you’re in the right ballpark, most sellers will “open the kimono” and provide deeper access for diligence.

4) Management meetings, site visit, and data room expand

This is the stage where the deal moves past numbers on a page and into how the business truly operates. Management presentations, site visits, and expanded data room access give you a window into what’s working, what’s not, and what risks could derail the deal.

It’s also the point where buyers lean most heavily on advisors, consultants, and industry specialists. Sophisticated sellers will have polished answers prepared. You need someone on your side who knows where to press, what questions expose the real issues, and what details signal deeper problems. This is where you gather intelligence: which issues can be managed, which need to be priced in, and whether there are any hidden “boobytraps” that could cause the deal to fall apart.

Where industry-specific advisors add the most value in restoration diligence:

• Job documentation: Whether files align with industry standards (e.g., IICRC S500 for water losses). Not to expect perfection, but to test collection defensibility, insurance recoverability, and liability exposure.

• Program/TPA status (if present): Which programs exist, whether they’re assignable, required re-approvals or consents, insurance thresholds, and scorecards (Contractor Connection, Alacrity, etc.). These relationships are critical to sustaining volume post-close.

• Fleet & equipment: Age profile, maintenance practices, and replacement curve. If the business has been running trucks and drying equipment into the ground, you’re inheriting a capex cliff that needs to be priced in.

• People & leadership bench: Will PMs, estimators, and supervisors stay engaged if the seller steps back? Or is the business still owner-reliant? Leadership depth is often the single biggest determinant of sustainability.

• Cash flow dynamics: Restoration isn’t like most service businesses. Insurance billing, mortgage checks, and commercial pay cycles create long AR lags. Specialists know what’s “normal” vs. what signals weak collections practices — and whether deposits, liens, or deductibles are being collected properly.

• Revenue quality & mix: A restoration-savvy advisor will assess mitigation vs. reconstruction, CAT vs. program vs. commercial, and recurring vs. one-off jobs. Not all revenue is equal — some buyers pay premiums for balance, while CAT-heavy firms face discounts without diversification.

• Key performance indicators (KPIs): Restoration has its own set of operational metrics that general diligence teams overlook. Average days-to-collect, margin by job type, estimate-to-close ratios, labor utilization, and TPA cycle-time scores all tell the real story of performance.

• Compliance & liability exposure: Are there consistent safety logs, training certifications, and environmental/disposal compliance? Misses here can trigger both regulatory risk and lost insurance program eligibility.

• Technology & systems: Which job management platforms are in use (DASH, iRestore, Encircle, Xactimate, etc.)? Are they integrated with accounting, or is job costing still manual? Weak systems usually correlate with inaccurate reporting and margin leakage.

  
  

Pitfall: Generalist diligence teams may confirm EBITDA, but they rarely catch the operational and cash flow risks that define restoration. Without restoration-specific diligence, buyers risk overpaying, inheriting broken systems, or missing hidden liabilities that only show up post-close.

5) LOI: price and terms (your leverage moment)

A strong LOI sets the roadmap for the entire transaction. The LOI should outline how you want the deal to look: price, structure, financing, working capital expectations, and key terms. It becomes the framework your attorneys will use to draft the definitive agreements.

In short, the LOI locks in the levers that determine not just what you’ll pay, but how much risk you’ll carry into closing and beyond.

• Structure: asset vs. stock; rollover equity (if any); any deferred/contingent components.

• Exclusivity window: 45, 60, and 90 days is common; tie it to milestones (QoE kickoff, draft purchase agreement due).

• Working capital: formula, definition, and peg math in the LOI - don’t leave it vague.

• Diligence scope & access: set data room expectations, site access, employee access, customer calls/confirmations.

• Financing conditions: especially if using SBA or bank debt - be explicit on timelines and deliverables.

Pitfall: Treating the LOI as “just a formality.” A vague LOI leaves critical deal mechanics to be fought over later, when your leverage has dropped. That almost always leads to re-trades or concessions in diligence. The more detail you lock in at LOI, the fewer surprises (and the more control) you’ll have down the line.

6) Confirmatory diligence (30–60 days typical)

Run parallel workstreams (during exclusivity phase) with a clear owner for each. Speed + rigor preserves momentum.

Financial / QoE

• In-depth analysis of a company's financial health and earnings

• Validate EBITDA and earnings quality, revenue recognition, job costing, and cash conversion.

• Recompute the working-capital peg using agreed methodology.

  
  

Commercial & operational

• Customer concentration risk: Analyze reliance on any single or few customers

• Program/TPA: confirm re-credentialing path, insurance, and any non-assignable elements.

• Job documentation and Compliance - gaps affect collectability and liability.

• Fleet/equipment: quantify near-term capex; price or terms adjust if there’s a replacement cliff.

  
  

Legal & tax

• APA/SPA structure, reps & warranties, permits, leases, environmental, issues, sales/use tax exposures.

  
  

HR

• Key employee retention, comp plans, non-competes, benefits harmonization.

  
  

Timeline support: LOI-to-close often ~45–60 days. Highly dependent on financing or any third party approvals.

7) Financing package (if third-party capital is part of the stack)

• If you’re using debt, this typically means a conventional bank loan or an SBA 7(a) . SBA lenders follow SBA rules but apply their own credit policies. Your bank will set the requirements, so keep communication open with multiple lenders to avoid bottlenecks.

• If you have equity investors or partners, the process adds another layer: you’ll need to run the deal through your investment approval process and secure committed capital.

You should be communicating with your financing partners throughout the entire deal process.

Pitfall: Treating financing as “sequential” instead of parallel. If lender diligence, investor approvals, or capital raise activities trail the deal timeline, you’ll lose momentum and risk missing exclusivity deadlines.

8) Definitive agreements (turn the LOI into an APA/SPA)

Key economics that actually determine your take-home outcome:

• Indemnities & escrow/holdback: escrows are very common; 10% and 12–18 months are widely cited medians for traditional structures (deal size and RWI usage can change this.

• Reps & warranties insurance (RWI): more prevalent in larger deals; sub-$20M restoration deals still often use traditional escrows.

• Working-capital true-up: define calculation mechanics and dispute process tightly.

• Earnouts: Identifying targets and performance thresholds can be tricky; longer earnout periods have become more common. Clearly defined mechanics and measurement are integral to an effective earnout.

  
  

9) Third-party approvals & closing conditions

• Program/TPA re-approvals (credentialing, insurance limits, SLAs) - line these up early to avoid a last-minute value haircut.

• Landlord consents, vehicle/lease assignments, other surviving contracts.

  
  

10) Close & Day-1 plan

• Funds flow finalized; escrow established; signatures done.

• Day-1 communication: employees, top customers, and program administrators hear directly from leadership.

• Transition plan: even if you run a light-touch model, establish leadership and expectations on Day-1—autonomy without clear authority bleeds margin.

  
  

What actually swings price and terms (in restoration)

• Quality of earnings and cash conversion (collections discipline).

• Revenue mix (mitigation + recurring commercial/program vs. CAT spikes).

• Customer concentration.

• Leadership depth & systems (can it run without the seller).

• Capex needs (aging vehicles/equipment).

• Contract transferability (program/vendor re-approvals).

  
  

Typical pitfalls to avoid

1. Vague LOI language

2. Assuming program/TPA work automatically transfers

3. Underestimating collections risk

4. Ignoring capex cliffs.

5. Overlooking customer concentration

6. Financing misalignment

7. Failing to establish leadership Day-1

   
   

The Deal

Winning restoration acquisitions are built on tight LOIs, disciplined diligence, aligned financing structure, and clarity around the key operational drivers of the business. If you structure the process appropriately and have realistic expectations, you can have an efficient, productive outcome that gets the deal across the finish line without unnecessary delays, surprises, or value erosion.