⚠️ Red Flag Case Study: One Truck, One Hot Summer

~ Certified Business Appraiser

A $675K HVAC valuation assumed $125K in annual free cash flow.

But: ❌ 62% of revenue came from one unusually hot season
❌ Owner performed 100% of installs
❌ No service contracts or recurring revenue
❌ No CapEx adjustment for aging truck/tools

We normalized to ~$65K in sustainable cash flow.
True value: ~$375K. Lender avoided major exposure.

📌 Heat doesn’t equal value. Look for recurring work and durable margins.