Recommendation
Proceed with caution
Sample ADE output before deeper diligence.
Sample deal analysis
Great Lakes HVAC Services
SBA Financing Ceiling
$1.34M
Estimated DSCR
1.21x
Proof Gap
6 items
A public ADE-style preview showing recommendation, financeability, buyer risk warnings, proof gaps, and LOI readiness questions.
This is a sample deal for demonstration only. It is not a real company, not investment advice, not valuation advice, and not a financing commitment.
ADE output
Here is how ADE explains why the result is fragile or supportable
Recommendation
Proceed with caution
Segment
Main Street / SBA
Estimated SBA Financing Ceiling
$1,340,000
Estimated DSCR
1.21x
Financeability
Tight
Buyer Risk Warnings
3
Proof Gap / Missing Info
6 items
LOI Readiness Questions
6
Deal Quality
Mixed but reviewable
Post-Close Execution Risk
High
Operator Readiness
Unproven
Buyer Fit
Operator-dependent
Asymmetry
Thin margin for error
Watch items
5
ADE's financing ceiling is not a valuation target. It is a lender-style supportability check that helps buyers avoid anchoring on a price the cash flow may not support.
SBA financing ceilingSupported
Financing support, DSCR, buyer warnings, and LOI readiness
Market Segment Analysis
Segment lens and diligence standard
This looks like a Main Street/SBA-style deal. ADE is applying SBA supportability and owner-operated risk logic.
Segment
Main Street / SBA
ADE classified from available data.
Primary Financing Lens
SBA supportability
Diligence Standard
Pre-LOI searcher screen
Estimated SBA Financing Ceiling
Not available
Capital Stack
Unknown
EBITDA Basis Used
Adjusted EBITDA
$420,000
Total Debt Capacity
Not available
Proposed Senior Debt
Not available
Proposed Total Debt
Not available
Sponsor Equity Need
$1,650,000
Equity Gap
$1,650,000
Senior Debt / EBITDA
Not available
Total Debt / EBITDA
Not available
Interest Coverage
Not available
Annual Debt Service
Not available
Adjusted EBITDA DSCR
Not available
Post-Maintenance-CapEx DSCR
Not available
Key Segment Risks
- SBA underwriting dependence
- add-back quality
- owner-operated transition risk
- seller transition support
Institutional Diligence Gaps
No major institutional diligence gaps were surfaced from the current inputs.
Leverage Assumptions
- Main Street / SBA deals continue to use the SBA supportability model.
SBA Financeability Check
Can an SBA buyer finance this deal at the asking price?
A deal is only worth what the cash flow can finance. First-pass estimate only, not lender approval or final underwriting treatment.
Financeability Status
STRONG
Deal appears financeable under the current assumptions.
Financing Ceiling Analysis
Current asking price vs estimated SBA financing ceiling
ADE's financing ceiling is not a valuation target. It is a lender-style supportability check that helps buyers avoid anchoring on a price the cash flow may not support.
Current Asking Price
$1,650,000
Estimated SBA Financing Ceiling
$2,064,966
Financing capacity, not valuation.
Price Gap
-$414,966
Support exceeds asking price.
Price Gap (% of Asking)
-25.1%
Senior Debt Capacity
$1,887,477
Asking Price
$1,650,000
Total Project Cost
$1,824,000
Buyer Equity Required
$182,400
10.0%
Estimated SBA Loan
$1,491,600
Estimated Annual SBA Debt Service
$246,562
Seller Note Debt Service
$0
Total Annual Debt Service
$246,562
Cash Flow Available for Debt Service
$390,000
Estimated DSCR
1.58x
Target DSCR
1.25x
SBA Loan Capacity
$1,887,477
Estimated SBA Financing Ceiling
$2,064,966
Financing Mode
SBA-relevant
Asking Price Gap
-$414,966
Support exceeds asking price
DSCR Stress Thresholds
1.10x1.15x1.25x1.35x1.50x
What Would Need To Change
- Maintain proceed status by keeping the debt request inside verified cash-flow support.
- Keep senior debt at or below $1,887,477 unless EBITDA/SDE improves.
- Verify EBITDA/SDE, add-backs, working capital, and CapEx before a lender conversation.
- Preserve seller transition support and clean documentation through diligence.
LOI Readiness Snapshot
3/6 confirmedPartially ready
This deal may be interesting, but buyer readiness appears incomplete. Before submitting an LOI, confirm financing capacity, equity needed, lender interest, key diligence questions, and major risk flags.
Lender contact identifiedUnknown
Debt capacity estimatedYes
Equity needed estimatedYes
Key risks identifiedYes
Diligence request list readyUnknown
LOI template readyUnknown
Lender Conversation Text
First-pass SBA-style acquisition debt screen: the deal appears financeable. Estimated DSCR is 1.58x versus a 1.25x target. Requested SBA debt is $1,491,600; estimated supportable senior debt is $1,887,477. Current asking price is $1,650,000; estimated SBA financing ceiling is $2,064,966, creating a price gap of $0. Main risks: none surfaced by this screen, subject to verifying the inputs. This is a first-pass financeability screen, not a lender approval.
Broker Pushback Text
Based on the current cash flow and SBA-style debt-service pressure test, the asking price appears supportable in this first-pass screen. We should continue the discussion, subject to verifying EBITDA/SDE, add-backs, working capital, CapEx, seller transition support, and lender diligence.
Buyer Risk Warnings
SBA Pre-Qualification Reality Check
concernSBA pre-qualification should be treated as a starting point, not proof of bankability. Confirm the lender's assumptions, required equity injection, add-back treatment, DSCR, and whether the review was based on full financials or only CIM/teaser information.
- Deal is advertised as SBA pre-qualified, but the source is broker. Confirm whether a lender actually reviewed the file.
- SBA pre-qualification appears based on cim only, not confirmed full financials.
- Lender-reviewed add-backs are unknown; do not treat adjusted SDE/EBITDA as bank-quality cash flow yet.
- Lender-provided DSCR estimate is unknown; confirm debt-service math before relying on the pre-qualification.
Screening Notes
- A deal is only worth what the cash flow can finance.
- This is a first-pass financeability screen, not final credit underwriting.
- ADE's financing ceiling is not a valuation target. It is a lender-style supportability check that helps buyers avoid anchoring on a price the cash flow may not support.
Proof gap
Missing information ADE would force the buyer to resolve
Proof Gap / Missing Information
- Add-back support is not shown in lender-reviewable form.
- Customer concentration and referral-source durability need more detail.
- Seller role in customer retention is not fully explained.
- Project-based revenue risk needs renewal or replacement evidence.
- Lender DSCR assumptions are not confirmed by a lender.
- Working capital and maintenance capex needs should be verified before LOI.
LOI Readiness Questions
- Has a lender reviewed the actual add-back support?
- What DSCR does the deal produce under the buyer's final debt assumptions?
- How much equity is needed if the seller does not move on price?
- Which customer relationships transfer without the seller?
- What revenue could expire, pause, or fail to recur after closing?
- What diligence requests must be answered before an LOI is credible?
Earnings durabilitySUPPORTEDSUPPORTEDUNSUPPORTED
Does this deal still work if earnings fall back to a weaker year?
Earnings Durability / Down-Year Supportability
Does this deal still work if earnings fall back to a weaker year?
ADE separates base-case financeability from conservative cash-flow support so a deal is not treated as clean just because the latest or best year supports the price.
Earnings Durability
Volatile
Conservative Basis
$365,000
Summary
Historical earnings are volatile enough that the latest year should be stress-tested before treating the asking price as supportable.
Earnings Durability / Down-Year Supportability: conservative earnings stress case prevents a clean Proceed.
Historical Earnings
Latest: $420,000
Median: $365,000
Low year: $310,000
Volatility spread: 26.2%
Supportability Cases
Base Case
Earnings basis: $420,000 (2024)
Ceiling: $2,064,966
Gap: -$414,966
DSCR: 1.58x
Median Year
Earnings basis: $365,000
Ceiling: $1,785,948
Gap: -$135,948
DSCR: 1.36x
Down-Year
Earnings basis: $310,000 (2021)
Ceiling: $1,506,931
Gap: $143,069
DSCR: 1.14x
Warnings
- Best-Year Earnings Risk: The asking price appears supportable using latest-year earnings, but the deal becomes tight or unsupported under a conservative down-year cash flow scenario. Do not treat the latest EBITDA/SDE as bankable without validating repeatability, customer concentration, backlog, and lender-reviewed add-backs.
- Down-year supportability falls below the asking price; the down-year SBA financing ceiling is $1,506,931.
- Project-based, temporary, expiring, or weak recurring revenue may explain earnings swings; validate backlog conversion and repeatability.
- Seller or broker support for why latest-year earnings are repeatable is not strong enough yet.
Post-close execution risk
Can this deal survive after closing?
Post-Close Execution Risk
Can this deal survive after closing?
Financeable does not mean executable. Supportable does not mean safe. ADE separates deal quality from post-close execution risk so a financeable deal does not look cleaner than the operator plan.
Post-Close Execution Risk
High
Operator Readiness
Unproven
Summary
The deal may be financially supportable, but the post-close operator plan is not strong enough to treat this as a clean Proceed.
Post-Close Execution Risk: high execution risk prevents a clean Proceed.
Risk Drivers
- High owner dependence
- Transition readiness is not fully proven
- Seller appears central to sales or customer relationships
- Technical complexity needs operator validation
Questions Before LOI
- Who runs the business on day one?
- What does the seller do today that no one else can do?
- Which customers are tied directly to the seller?
Ways to Reduce Execution Risk
- Name the day-one operator and document their operating authority.
- Turn seller training, handoff duties, and transition length into written LOI terms.
- Map seller-tied customer relationships and require a customer handoff plan.
- Confirm license coverage and technical supervision before close.
Risk readout
Hard flags, watch items, strengths, and weaknesses
Hard risk flags
- High owner dependence creates transfer risk if the seller relationship drives customer retention.
- Broker-indicated SBA prequalification appears to be based on CIM-level material rather than lender-reviewed financials.
- Asking price sits above the estimated SBA financing ceiling, which may require more equity, more seller financing, or price movement.
Watch items
- Confirm whether project-based revenue is repeatable after close.
- Validate add-backs with lender-reviewable support before relying on adjusted cash flow.
- Pressure-test customer concentration and referral sources.
- Clarify seller transition period, customer handoff, and key employee retention.
- Model working capital and maintenance capex so debt coverage is not overstated.
Strengths
- Meaningful revenue scale for an SMB home-services platform.
- Healthy reported cash flow before financing pressure is applied.
- Seller note provides some financing support and alignment.
- Industry has recurring service and replacement-demand potential if revenue quality is verified.
Weaknesses
- Owner dependence is high enough to reduce confidence before LOI.
- Financing ceiling is below asking price under the sample SBA-style assumptions.
- CIM-only prequalification is not the same as lender-reviewed support.
- Revenue durability is not fully proven because some work is project-based.
Lender memo preview
Decision reasoning
Recommendation: Proceed with caution. The sample deal has enough scale and reported earnings to deserve review, but it does not yet deserve buyer conviction.
The estimated SBA financing ceiling is below the asking price under the selected assumptions. That does not mean the business is bad. It means the buyer should not treat financing capacity as proof that the price is supportable.
The largest diligence issue is not one isolated metric. It is the combination of high owner dependence, CIM-only prequalification, project-based revenue risk, and limited evidence that add-backs are lender-reviewed. Those issues should be resolved before LOI terms harden.
ADE would not reject this deal from the sample facts alone. It would force the buyer to pause, tighten the assumptions, request proof, and document what must change before the deal deserves serious diligence.
Decision path
Proceed, Proceed with caution, or Reject
Proceed
The deal has enough support to justify the next step, while still naming what needs to be verified.
Proceed with caution
The deal may be worth more work, but the output is fragile until financing support, buyer fit, and diligence gaps are tightened.
Reject
The deal fails enough basic buyer, lender, or diligence checks that it should not absorb more time without a material change.
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