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Illustrative reports based on fictional transactions. Every company, person and figure is invented; the reports demonstrate our analytical approach and presentation. Your engagement’s scope and deliverables are agreed separately. Read the summary here, page through the full report, or browse the databook.

Illustrative report based on a fictional transaction

Project Summit: HVAC services · $2.0M

The buyer’s question

Does a $2.0M HVAC acquisition, financed with an SBA loan and a standby seller note, work for a first-time buyer?

The finding

Not at this price. The illustrative analysis supports adjusted SDE of $450.5k, 12.8% below the broker-presented $516.7k. At $2.0M the buyer pays about 4.4x adjusted earnings, above the example’s 3.25–3.75x range, and year-three coverage is 1.245x, below the lender’s 1.25x floor before rounding.

How the analysis supports it

Market rent, partly supported compensation and personal-expense add-backs, recurring repairs and a warranty reserve: −$66.2k
Year-three debt service coverage 1.245x; below 1.0x if earnings fall 20%
Working capital: the deal funds $150k, the business needs about $251k by March, a shortfall of about $101k
Value from DCF and SDE and EBITDA multiples: $1.65M, within a $1.55–1.75M range

What it changes

Defer signing the LOI in its current form. Use about $1.65M as a discussion price, subject to earnings support, valuation support and lender approval, and arrange separate funding for the seasonal working-capital gap. At that price, illustrated year-three coverage is about 1.51x.

Engagement that produces it

Quality of Earnings, Valuation Analysis and Deal Second Opinion. The same deal is also shown as a Deal Check.

The business is sound. The price and structure are not.