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Sample ADE output: see whether the first impression survives the acquisition — and what has to change when it does not.

Sample deal analysis

Great Lakes HVAC Services

Recommendation

Proceed with caution

Acquisition Profile Score

81 / 100

SBA Financing Ceiling

$1,633,757

Estimated DSCR

1.24x

Proof Gap

6 items

At first glance, this looks like a credible operating company. ADE separates that impression from the acquisition decision and shows why an Acquisition Profile Score of 81 / 100 still leads 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.

First impression vs. acquisition

Does the first impression survive the acquisition?

Before ADE

“This looks like a good company.”

Reported cash flow, industry quality, seller financing, and scale make the opportunity look worth pursuing at first glance.

After the pressure test

The company may be good. The acquisition is still conditional.

Owner dependence, a financing gap, CIM-only lender support, and missing evidence mean the first impression does not yet survive the acquisition.

Defined next step

Proceed with caution

Not a vague maybe. The buyer now has a concrete list of financing, proof, transition, and diligence conditions that must improve before conviction is justified.

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. Caution is the decision path: continue only if the named financing, proof, transition, and buyer-risk questions can be resolved.

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 ceiling

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.

Anticipated policy scenario: SOP 50 10 8.1

SBA acquisition category not established

Analysis Confidence

Low

Evidence Confidence

Incomplete

Evidence gap: The SBA acquisition category is unresolved because ADE has not established whether the transaction is a change of ownership. (+12 more)

SBA Financeability

SBA requirement not yet established

7(a) product eligibility, Loan maturity and debt service, Historical / adjusted SBA DSC, Projected DSC, Equity injection, Independent QoE, Independent SBA valuation are not established. ADE is not treating the missing requirement as a failure.

Underlying deal: SBA financeability is not yet established. Missing evidence is not a zero, a neutral assumption, or a conclusion that the business is unattractive.

SBA Financing Path Eligibility

Unresolved

Product not established

SBA product eligibility remains unresolved because the product, policy, acquisition classification, program qualification, or proposed loan amount is incomplete.

Proposed SBA loan: $1,491,600. Single-loan maximum: not established.

SBA Acquisition Maturity

Unresolved

Applied term unresolved

The applicable SBA acquisition maturity remains unresolved because required allocation or term evidence is incomplete.

Proposed term: 10.0 years. Maximum: not established.

SBA Historical / Adjusted DSC

Unresolved

The applicable SBA acquisition DSC rule is unresolved because change of ownership has not been established.

The required historical basis has not been established.

SBA Equity Injection

Unresolved

not established required

The acquisition equity-injection rule is unresolved because change of ownership has not been established.

Proposed buyer equity: $182,400. Qualifying buyer contribution: unknown.

SBA QoE Dependency

Unresolved

Trigger unresolved

The QoE rule is unresolved until the policy and acquisition category are consistently established.

Business Purchase Price: not established. ADE does not perform or replace the lender-directed QoE.

SBA Valuation Dependency

Unresolved

UNRESOLVED

The valuation requirement is unresolved until a consistent change-of-ownership policy basis is established.

ADE's internal financing ceiling is not the required external SBA valuation.

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.

Tight

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

Business Purchase Price

Not established

Appendix 15 QoE trigger basis; excludes verified appraised owner-occupied CRE.

SBA QoE Requirement

Unresolved

QoE-Supported Earnings

Not available

Required earnings period not established

External SBA Valuation

Not available

Unresolved

Price Above External Valuation

Unresolved

ADE price observations are separate.

Proposed Buyer Equity

$182,400

10.0% scenario — not verified funds

Required SBA Injection

not established

Buyer Qualifying Contribution

Unknown

Qualifying liquidity not established

Eligible SBA Injection

Unresolved

Injection Shortfall

Unresolved

Proposed / Applied SBA Term

Unresolved

Maximum Permitted SBA Term

Not established

Real Estate Use Allocation

Unknown

Allocation share unresolved

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

Historical / Adjusted SBA DSC

Unresolved

Applicable SBA DSC Minimum

Not established

Projected DSC

Unresolved

Evaluated separately; cannot cure the 8.1 historical minimum.

ADE Underwritten DSC

1.24x

ADE Underwriting Target

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

Primary

The 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

Possible

Approximately $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

Possible

Approximately $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

Possible

The 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

Establish the proposed financing path and its required product, qualification, and eligible-use facts before treating it as SBA-compliant.
Establish and verify the business, equipment, working-capital, soft-cost, and real-estate use allocation before treating SBA debt service as resolved.
Establish qualifying buyer liquidity and resolve each proposed injection source before treating the structure as SBA-compliant.
Obtain and verify the lender-directed QoE, including its required scope and QoE-supported earnings period, before treating the SBA DSC test as resolved.
Obtain and verify the required lender-directed SBA valuation and its conclusion of value.
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 confirmed

Partially 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

Evaluated under anticipated SOP 50 10 8.1 policy scenario SBA Financeability: SBA requirement not yet established 7(a) product eligibility, Loan maturity and debt service, Historical / adjusted SBA DSC, Projected DSC, Equity injection, Independent QoE, Independent SBA valuation are not established. ADE is not treating the missing requirement as a failure. Underlying deal: SBA financeability is not yet established. Missing evidence is not a zero, a neutral assumption, or a conclusion that the business is unattractive. Analysis confidence: Low. Evidence confidence: Incomplete. SBA financing-path eligibility is unresolved: SBA product eligibility remains unresolved because the product, policy, acquisition classification, program qualification, or proposed loan amount is incomplete. ADE must not assume a product or missing program qualification. The SBA acquisition maturity is unresolved: The applicable SBA acquisition maturity remains unresolved because required allocation or term evidence is incomplete. Any provisional ADE debt-service or financing-capacity result must not be treated as an SBA pass. The SBA historical/adjusted DSC requirement is unresolved: The applicable SBA acquisition DSC rule is unresolved because change of ownership has not been established. ADE's separate underwritten DSC of 1.24x must not be treated as an SBA pass. The SBA injection test is unresolved: The acquisition equity-injection rule is unresolved because change of ownership has not been established. Buyer qualifying contribution is unknown; the proposed buyer-equity percentage must not be treated as an SBA pass. The SBA QoE dependency is unresolved: The QoE rule is unresolved until the policy and acquisition category are consistently established. ADE can identify the requirement, but it does not perform or replace the lender-directed QoE. The required SBA valuation dependency is unresolved: The valuation requirement is unresolved until a consistent change-of-ownership policy basis is established. ADE's internal financing-ceiling and price observations do not satisfy the valuation requirement.

Broker Pushback Text

Evaluated under anticipated SOP 50 10 8.1 policy scenario SBA Financeability: SBA requirement not yet established 7(a) product eligibility, Loan maturity and debt service, Historical / adjusted SBA DSC, Projected DSC, Equity injection, Independent QoE, Independent SBA valuation are not established. ADE is not treating the missing requirement as a failure. Underlying deal: SBA financeability is not yet established. Missing evidence is not a zero, a neutral assumption, or a conclusion that the business is unattractive. Analysis confidence: Low. Evidence confidence: Incomplete. SBA financing-path eligibility is unresolved: SBA product eligibility remains unresolved because the product, policy, acquisition classification, program qualification, or proposed loan amount is incomplete. ADE must not assume a product or missing program qualification. The SBA acquisition maturity is unresolved: The applicable SBA acquisition maturity remains unresolved because required allocation or term evidence is incomplete. Any provisional ADE debt-service or financing-capacity result must not be treated as an SBA pass. The SBA historical/adjusted DSC requirement is unresolved: The applicable SBA acquisition DSC rule is unresolved because change of ownership has not been established. ADE's separate underwritten DSC of 1.24x must not be treated as an SBA pass. The SBA injection test is unresolved: The acquisition equity-injection rule is unresolved because change of ownership has not been established. Buyer qualifying contribution is unknown; the proposed buyer-equity percentage must not be treated as an SBA pass. The SBA QoE dependency is unresolved: The QoE rule is unresolved until the policy and acquisition category are consistently established. ADE can identify the requirement, but it does not perform or replace the lender-directed QoE. The required SBA valuation dependency is unresolved: The valuation requirement is unresolved until a consistent change-of-ownership policy basis is established. ADE's internal financing-ceiling and price observations do not satisfy the valuation requirement.

Buyer Risk Warnings

SBA Pre-Qualification Reality Check

concern

SBA 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

SBA product eligibility: SBA product eligibility remains unresolved because the product, policy, acquisition classification, program qualification, or proposed loan amount is incomplete.
SBA acquisition maturity: The applicable SBA acquisition maturity remains unresolved because required allocation or term evidence is incomplete.
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.
ADE's separate financing-capacity screen remains provisional until the applicable SBA maturity and use allocation are established.
Product eligibility is unresolved until the policy and change-of-ownership classification are consistently established.
The equipment portion of the purchase price has not been established, including an explicit zero when none is included.
The real-estate portion of the purchase price has not been established, including an explicit zero when none is included.
The purchase-price and use allocation has not been verified.
The change-of-ownership fact must be established before applying an acquisition maturity rule.
The maximum permitted acquisition maturity cannot be calculated from the available allocation.
The acquisition equity-injection rule is unresolved because change of ownership has not been established.
The QoE rule is unresolved until the policy and acquisition category are consistently established.
The valuation requirement is unresolved until a consistent change-of-ownership policy basis is established.

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 durability

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)

Tight

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

Unsupported

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)

Unsupported

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

A conditional path, not indecision: the deal may deserve another step only if the named financing, buyer-fit, evidence, transition, or diligence gaps can be tightened.

Reject

The deal fails enough basic buyer, lender, or diligence checks that it should not absorb more time without a material change.

Great Lakes HVAC Services

Does the first impression survive the acquisition?

“This looks like a good company.”

The company may be good. The acquisition is still conditional.

Proceed with caution

Here is how ADE explains why the result is fragile or supportable

Financing support, DSCR, buyer warnings, and LOI readiness

Segment lens and diligence standard

Can an SBA buyer finance this deal at the asking price?

Current asking price vs estimated SBA financing ceiling

Lower the purchase price

Test standby or subordinated seller financing

Test a larger buyer equity injection

Verify stronger lender-quality cash flow

Missing information ADE would force the buyer to resolve

Proof Gap / Missing Information

LOI Readiness Questions

Does this deal still work if earnings fall back to a weaker year?

Does this deal still work if earnings fall back to a weaker year?

Can this deal survive after closing?

Can this deal survive after closing?

Hard flags, watch items, strengths, and weaknesses

Hard risk flags

Watch items

Strengths

Weaknesses

The screen becomes an advisor-ready handoff

Do not make the next conversation start from zero.

Decision reasoning

Proceed, Proceed with caution, or Reject

Proceed

Proceed with caution

Reject

Make the deal earn the expensive work.