Recommendation
Proceed with caution
Sample ADE output: the profile score, the recommendation, and the reasons they can differ.
Sample deal analysis
Great Lakes HVAC Services
Acquisition Profile Score
81 / 100
SBA Financing Ceiling
$1,633,757
Estimated DSCR
1.24x
Proof Gap
6 items
A public ADE-style preview showing how an Acquisition Profile Score of 81 / 100 can still lead to Proceed with caution once financeability, buyer risk, evidence gaps, and post-close execution are considered.
Profile Score ≠ Recommendation.
The score describes the acquisition profile as presented. The recommendation applies the harder decision rules to the current facts.
See how the ADE scoring model works →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
ADE Acquisition Profile Score
81 / 100
Segment
Main Street / SBA
Estimated SBA Financing Ceiling
$1,633,757
Estimated DSCR
1.24x
Financeability
Tight
Buyer Equity Required
$182,400
Estimated SBA Loan
$1,491,600
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
Hands-on only
Asymmetry
Strong
Watch items
5
An Acquisition Profile Score of 81 / 100 is not a permission slip. The recommendation stays at Proceed with caution because the current structure and evidence still leave too little margin for error.
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 ceilingTight
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
$1,633,757
SBA Financing
Tight
Cash Flow Basis Used
Latest completed fiscal year — 2024
$420,000
Estimated Senior Debt Capacity
$1,476,104
Requested / Estimated SBA Loan
$1,491,600
Buyer Equity Required
$182,400
Purchase-Price / Financing Gap
$16,243
Asking price exceeds cash-flow support.
Lender-Adjusted Cash Flow Available for Debt Service
$305,000
Positive lender-adjusted recurring cash flow
Preliminary Lender-Adjusted DSCR
1.24x
Target DSCR
1.25x
Total Annual Debt Service
$246,562
Key Segment Risks
- SBA underwriting dependence
- add-back quality
- owner-operated transition risk
- seller transition support
SBA / Lender Readiness Gaps
- Lender review of add-backs has not been confirmed.
- Lender-provided DSCR and debt-service calculations have not been confirmed.
- A lender contact has not been identified.
- SBA pre-qualification assumptions have not been lender-verified.
- Financial review is based only on CIM, teaser, or seller-provided information.
SBA Assumptions
- Main Street / SBA deals continue to use the SBA supportability screen.
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.
Preliminary Lender-Adjusted DSCR
1.24x
Tight
Preliminary lender-adjusted DSCR: 1.24x — Tight
Basis: Latest completed fiscal year — 2024 ($420,000)
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
$1,633,757
Financing capacity, not valuation.
Price Gap
$16,243
Asking price exceeds cash-flow support.
Price Gap (% of Asking)
1.0%
Senior Debt Capacity
$1,476,104
Asking Price
$1,650,000
Total Project Cost
$1,824,000
Buyer Equity Required
$182,400
10.0%
Estimated SBA Loan
$1,491,600
Senior SBA Debt Service
$246,562
Seller Note Debt Service
$0
Total Annual Debt Service
$246,562
Cash Flow Available for Debt Service
$305,000
Preliminary Lender-Adjusted DSCR
1.24x
Target DSCR
1.25x
Management / operator replacement compensation
Not provided
Preliminary lender-adjusted DSCR: 1.24x — Tight
Annual Maintenance CapEx Reserve
$30,000
Annual Working-Capital Reserve
$85,000
Seller Note Amount
$150,000
One-Time Working Capital Need
$75,000
Pre-Management Compensation Coverage
1.24x
Secondary diagnostic only; not the headline lender-adjusted result.
SBA Loan Capacity
$1,476,104
Estimated SBA Financing Ceiling
$1,633,757
Financing Mode
SBA-relevant
Asking Price Gap
$16,243
Asking price exceeds support
Possible Structure Paths
If the deal does not work as presented, these are the first structures to test before concluding the current transaction cannot proceed as structured.
Lower the purchase price
PrimaryThe asking price appears to exceed estimated cash-flow supportability by approximately $16,243.
Estimated gap: $16,243
- This is a financing supportability gap, not a valuation conclusion.
Test standby or subordinated seller financing
PossibleApproximately $15,496 of senior debt would need to be replaced under the current cash-flow capacity. This only improves supportability if the seller paper receives lender-acceptable standby, payment-deferral, and subordination treatment.
Estimated senior debt replacement needed: $15,496
- An amortizing seller note must be modeled as additional debt service.
- Lender acceptance of standby, payment-deferral, and subordination treatment is not assumed.
Test a larger buyer equity injection
PossibleApproximately $15,496 of additional buyer equity may be needed to reduce the senior debt requirement.
Estimated gap: $15,496
- More equity does not fix weak cash flow, poor earnings quality, or unsupported add-backs.
Verify stronger lender-quality cash flow
PossibleThe current asking price may require approximately $3,202 more verified annual lender-quality cash flow.
Estimated gap: $3,202
- Do not rely on seller add-backs until they have been reviewed by a lender or qualified financial professional.
DSCR Stress Thresholds
1.10x1.15x1.25x1.35x1.50x
What Would Need To Change
- Reduce purchase price by approximately $16,243 to match cash-flow support.
- Increase verified EBITDA/SDE by approximately $3,202, or verify add-backs of that scale before relying on them.
- Increase buyer equity by approximately $15,496 to reduce the senior debt request at the asking price.
- Test whether approximately $15,496 of the senior debt gap can be replaced with lender-acceptable standby, payment-deferred, and subordinated seller support. Ordinary amortizing seller debt adds debt service and must be modeled separately. Lender acceptance is not assumed.
- Reduce requested SBA senior debt by approximately $15,496 or replace it with equity or standby seller paper.
- Improve DSCR from 1.24x toward 1.25x by lowering debt service or improving verified cash flow.
- Verify add-backs before relying on them.
- Add stronger seller transition support if owner knowledge remains material.
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 looks weak for an SBA buyer. Preliminary lender-adjusted DSCR is 1.24x versus a 1.25x target using latest completed fiscal year — 2024. Requested SBA debt is $1,491,600; estimated supportable senior debt is $1,476,104. Current asking price is $1,650,000; estimated SBA financing ceiling is $1,633,757, creating a price gap of $16,243. Test whether approximately $15,496 of the senior debt gap can be replaced with lender-acceptable standby, payment-deferred, and subordinated seller support. Ordinary amortizing seller debt adds debt service and must be modeled separately. Lender acceptance is not assumed. Main risks: asking price exceeds the estimated SBA financing ceiling by $16,243; requested SBA debt exceeds estimated supportable senior debt by $15,496; DSCR is below the 1.25x target. This is a first-pass financeability screen, not a lender approval.
Broker Pushback Text
Based on the provided cash flow and an SBA-style debt-service pressure test, the asking price does not appear supportable as structured. Cash flow supports an estimated senior debt amount of $1,476,104 and an estimated SBA financing ceiling of $1,633,757, leaving a gap of $16,243. Test whether approximately $15,496 of the senior debt gap can be replaced with lender-acceptable standby, payment-deferred, and subordinated seller support. Ordinary amortizing seller debt adds debt service and must be modeled separately. Lender acceptance is not assumed. Price reduction, more buyer equity, or verified EBITDA/SDE support may still be required.
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.
- One-time working capital at closing, annual working-capital reserve, 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 durabilityTightUnsupportedUnsupported
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
Primary lender underwriting uses latest completed fiscal year — 2024 at $420,000. Current/TTM earnings remain visible as the TTM / management case; median and down-year cases use the same management compensation, annual reserves, and annual debt-service calculation.
Earnings Durability / Down-Year Supportability: primary lender-adjusted coverage is below the supportive threshold.
Historical Earnings
2021: $310,000
2022: $335,000
2023: $395,000
2024: $420,000
TTM/current: $420,000
Historical median: $365,000
Low year: $310,000
Volatility spread: 26.2%
Supportability Cases
Primary Underwriting Case
Earnings basis: $420,000 (2024)
Management compensation: $0
Annual maintenance CapEx reserve: $30,000
Annual working-capital reserve: $85,000
Lender-adjusted cash flow: $305,000
Annual debt service: $246,562
Preliminary lender-adjusted DSCR: 1.24x
Median Historical Case
Earnings basis: $365,000
Management compensation: $0
Annual maintenance CapEx reserve: $30,000
Annual working-capital reserve: $85,000
Lender-adjusted cash flow: $250,000
Annual debt service: $246,562
Preliminary lender-adjusted DSCR: 1.01x
Down-Year Case
Earnings basis: $310,000 (2021)
Management compensation: $0
Annual maintenance CapEx reserve: $30,000
Annual working-capital reserve: $85,000
Lender-adjusted cash flow: $195,000
Annual debt service: $246,562
Preliminary lender-adjusted DSCR: 0.79x
Warnings
- Down-year supportability falls below the asking price; the down-year SBA financing ceiling is Not calculable.
- 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.
- Verify one-time working capital at closing, annual working-capital reserve, 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.
ADE Advisor Brief
The screen becomes an advisor-ready handoff
Do not make the next conversation start from zero.
When a deal deserves another step, ADE can turn the saved analysis into a printable Advisor Brief so the buyer can carry one organized fact pattern into lender, CPA, attorney, and deal-team conversations.
The Advisor Brief does not replace professional review. It helps the professionals see the same assumptions, risks, and unresolved questions faster.
Advisor Brief includes
- ✓Recommendation and ADE Acquisition Profile Score
- ✓Financing support, DSCR, equity need, and structure assumptions
- ✓Buyer profile and post-close operator context
- ✓Hard risks, watch items, proof gaps, and open questions
- ✓A printable handoff for lender, CPA, attorney, and deal-team review
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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