Sample report · fictional company
Sample Deal Screen: a commercial HVAC company
This is the format you receive for $750, filled in for a fictional commercial HVAC service company. Names and figures are invented to show the method; the structure, checks and math are the real ones.
1. Summary
Deal Screen · W/P A| Business | Commercial HVAC service and maintenance contracts, 22 staff (fictional) |
| Asking price | $2,400,000 |
| Seller's stated SDE | $720,000 |
| SDE that traces | $540,000 |
| Coverage at asking price | 1.10× (below 1.25×) |
| Highest price that clears 1.25× | ≈ $2,110,000 |
Verdict: pursue only at a lower price. Three add-backs worth $180,000 don't trace. At the asking price the loan fails the 1.25× test; at about $2.11M it clears. Ask the seller the seven questions in section 5 before signing an LOI above that.
2. Earnings recast
W/P B · from CIM, P&L and 2023–2025 returns| 2023 | 2024 | 2025 | TTM | |
|---|---|---|---|---|
| Revenue per tax return | 3,610,000 | 3,880,000 | 4,050,000 | n/a |
| Revenue per P&L | 3,640,000 | 3,930,000 | 4,116,000 | 4,186,000 |
| Bank deposits (statements provided) | n/a | 3,872,000 | 4,046,000 | 4,118,000 |
| Net income per return | 251,000 | 276,000 | 294,000 | n/a |
| Seller's stated SDE | 720,000 |
The P&L runs about $66,000 above the tax return and $70,000 above bank deposits in 2025. The seller's "cash sales" adjustment explains the gap; deposits don't support it.
3. Add-back trace
W/P C · each item to source| Owner salary & payroll tax W-2 and payroll register match | ✓Supported | 142,000 |
| Owner health insurance carrier invoices cover 2025 only; 2024 pending | ◐Partly supported | 18,000 |
| Depreciation & amortization Form 4562 | ✓Supported | 64,000 |
| Interest equipment loan, seller says retired at close | ✓Supported | 22,000 |
| "One-time" compressor rebuild similar costs in 2023 and 2025 | ✗Not supported | 48,000 |
| Spouse and son on payroll both dispatch daily; replacement cost similar | ✗Not supported | 66,000 |
| Cash sales not deposited no deposit or invoice trail | ✗Not supported | 66,000 |
| Add-backs supported or partly supported | 246,000 of 426,000 |
Partly supported items stay in SDE that traces until the missing support arrives.
4. Coverage and price
W/P D · SBA 1.25× test on historical cash flow| SDE that traces | 540,000 |
| Less market salary for a general manager | (110,000) |
| Less maintenance capex | (45,000) |
| Cash flow available for debt service | 385,000 |
| Debt service on $2.16M, 10 years at 10.5% | 349,752 |
| Coverage at asking price | 1.10× |
| Debt service the business supports at 1.25× | 308,000 |
| Highest loan / price at 10% equity | 1,902,000 / 2,113,000 |
Assumes a seller note, if any, sits on full standby and is excluded from coverage. Your lender's rate, term and adjustments will differ.
5. Red flags and questions for the seller
W/P E- Send monthly bank statements for 2023–2025 so deposits can be tied to monthly revenue.
- Provide invoices and payment records for the compressor work in 2023, 2024 and 2025.
- Send the 2024 carrier invoices for the owner's health insurance.
- Describe the spouse's and son's daily duties and whether they stay after closing.
- Explain how "cash sales" were recorded and why they aren't in deposits.
- List the top ten customers by 2025 revenue and their contract end dates.
- Confirm which equipment loans are paid off at closing.
Per the CIM (not yet verified): top customer is 14% of revenue (manageable). Service agreements renew annually; 9 of the top 10 renewed in 2025.
6. Recommendation
W/P FDon't sign an LOI at $2.4M. Offer around $2.1M, or keep the price and ask the seller to carry a note on full standby for the gap, subject to the lender's rules. If the seller can document the cash sales, coverage on your numbers would rise to about 1.29×. Lenders underwrite from filed tax returns, so unreported cash is unlikely to count toward the loan.
Want this for your deal?
Send the CIM or seller's P&L. Same format, your numbers, in 48–72 hours for a flat $750.