The $200 billion US disaster-restoration industry, which runs the gamut from mold-remediation services to fire-damage repair, has traditionally been r

Natural disasters are making a mess of America. Private equity wants the cleanup cash

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2024-10-11 22:30:06

The $200 billion US disaster-restoration industry, which runs the gamut from mold-remediation services to fire-damage repair, has traditionally been run by small, local, independent businesses. It’s how the giants in the industry got started: New York-based Belfor USA bought into the industry when it acquired a small family company founded in 1946 as Quality Awnings & Construction, while cleanup titan Servpro began as an independent painting company in 1967 in Sacramento, California.

Restoration businesses became private-equity targets with the successive disasters of Hurricane Katrina in 2005 and the financial crisis in 2008. Katrina demonstrated the scale and potential addressable market of modern disaster cleanup; two years later, the financial crisis nudged private equity into seeking out businesses with stable cash flows in fragmented industries. The restoration industry is an investor’s dream: it’s replete with mom-and-pop operators who are guaranteed business by the ever-increasing stream of natural disasters.

“This industry is recession-proof and keeps growing,” said JT Kraai, CEO and founder of Exit Strategies 360, which brokers merger-and-acquisition deals between private equity and restoration and remediation firms.