A pest control firm showed $140K in SDE and wanted $495K. But: ❌ Owner ran 95% of routes personally❌ “Contracts” were informal and non-binding❌ Addbacks included personal gas and truck lease❌ No staff, no CRM, no SOPs We normalized for buyer labor and capex. Adjusted FCF: $45KTrue value: ~$260K 📌 Lender avoided over-financing a job … Continue reading ⚠️ Red Flag Case Study: Owner-Operated Trap

 🪳 Pest control companies look attractive on paper—recurring contracts, steady demand—but valuations still fail when: Routes are owner-run and not transferable Addbacks include personal vehicle or phone tied to service delivery Contract terms are month-to-month or verbal CapEx for trucks and sprayers is ignored Limited or no cash flow despite recurring revenue 📌 Recurring revenue … Continue reading 🧠 Valuation Insight: Recurring Revenue ≠ Recurring Value

🧾 New release: Our Industrial Equipment Distributor Valuation Checklist It covers:✅ Inventory turnover + obsolescence review✅ Owner comp and labor normalization✅ Customer + contract dependency✅ Margin trend sanity checks✅ SBA SOP guidance on working capital + inventory 📩 Click here to grab your copy.

An equipment distributor was under contract at $1.6M based on $300K in "cash flow." But: ❌ $200K in obsolete inventory was included at full value❌ Gross margins were declining—under 18%❌ Owner did sales, sourcing, and account management❌ 2 largest customers = 58% of revenue ✅ Adjusted FCF: ~$155K✅ Normalized value: ~$925K 📌 Cash flow pays … Continue reading ⚠️ Red Flag Case Study: Stale Steel and Phantom Margins

 ⚙️ In equipment distribution, high revenue can be misleading if: Inventory is overvalued or slow-moving Gross margins are razor-thin Owner plays multiple critical roles (sales, procurement, ops) Customer base isn’t recurring or contract-based 📌 Don’t let top-line revenue distract from thin margins or inventory drag. Normalize cash flow, and separate inventory value from goodwill.

📘 We just dropped our CPA Firm Valuation Checklist for SBA lenders. Includes:✅ Personal vs. enterprise goodwill test✅ Owner comp vs. buyer comp normalization✅ Staff support + systems review✅ Seasonality and client retention analysis✅ Addbacks that don’t fly with underwriters 📩 Click here to grab your copy.

A small firm reported $160K in free cash flow and asked $900K. But: ❌ Owner did all tax prep and client relationships❌ No W-2 staff, no CRM, no formal retention system❌ 75% of clients were friends/family/long-term loyalists❌ Buyer was new to public accounting After normalizing for owner compensation and personal goodwill risk, true value: ~$380K … Continue reading ⚠️ Red Flag Case Study: The Vanishing Client List

 🧾 A CPA firm may show strong earnings—but is the value transferable? Red flags in accounting practice valuations: 90%+ of clients tied to the owner personally No staff or systems in place High seasonality with no retention strategy Addbacks include “off-season” travel and vehicles 📌 Goodwill must be enterprise-based, not just personal rapport. That’s what … Continue reading 🧠 Valuation Insight: Goodwill ≠ Transferability

📘 New for SBA lenders: Our Manufacturing Valuation Checklist Covers:✅ Owner-engineer wage adjustments✅ Customer and contract risk flags✅ CapEx vs. depreciation sanity checks✅ Asset-heavy vs. income-heavy guidance✅ Red flags from the shop floor 📩 Click here to grab your copy.

A manufacturer claimed $490K in free cash flow and $2.1M in value. But: ❌ 70% of sales came from a single aerospace client❌ CapEx averaged $90K/year—report showed $0❌ No market replacement wage for owner-engineer❌ Machinery valued at historical cost, not FMV ✅ Final value after adjustments: $1.12M✅ Deal restructured and saved 📌 Manufacturing deals require … Continue reading ⚠️ Red Flag Case Study: $2.1M… or $1.1M?