A dentist claimed $275K in seller’s discretionary earnings and priced the practice at $1.5 million. But: ❌ No associate❌ No staff contracts❌ 94% of production came from the owner❌ Buyer was newly licensed We adjusted for owner/operator comp + patient attrition risk. True value: ~$750K✅ The lender restructured. ✅ The deal still closed. 📌 Cash … Continue reading ⚠️ Red Flag Case Study: The Solo Producer Problem

🦷 Dental practices often report strong cash flow—but is it sustainable after the seller leaves? Key issues: Owner-doctor usually drives 90%+ of production No associate or hygiene team in place Valuation assumes patients will stay with a new, unknown provider 📌 If the goodwill is personal, not enterprise, it doesn’t transfer—and neither should the value.

🧾 We built a quick-reference Restaurant Valuation Checklist for SBA lenders. It covers:✅ Addbacks to be skeptical of✅ Owner comp normalization tips✅ Equipment + CapEx traps✅ Red flag language in appraisal reports 📩 Click here to grab your copy.

A $750K restaurant valuation relied on “owner’s discretionary cash flow” of $185K. But: $45K = family payroll not expensed $18K = underreported delivery fees $22K = ‘miscellaneous’ addbacks with no backup $35K = no market salary for the full-time owner Real FCF: ~$65KReal value: closer to $275K 📉 The lender caught it in time and … Continue reading ⚠️ Red Flag Case Study: The Phantom $120K

🍽️ Restaurant financials can look deceptively strong—until you dig into: No owner wages expenses Uncaptured delivery fees or third-party platform costs CapEx ignored (kitchen/fixture replacement cycles) 📌 Rule of thumb: If free cash flow hasn’t been normalized, you’re underwriting a fantasy. ✅ Valuations must account for labor cost fluctuations, food inflation, and capital reinvestment cycles.