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?

 🏗️ Manufacturing companies can’t be valued on earnings alone—asset reinvestment, equipment age, and customer concentration matter too. 📌 Common mistakes in underwriting: Depreciated equipment valued at book value CapEx totally omitted or mismatched to reality No adjustment for single-client exposure Owner wages too low for technical oversight If you ignore the factory floor, the value’s … Continue reading 🧠 Valuation Insight: Manufacturing Is an Asset + Cash Flow Hybrid

A $1.1M liquor store purchase price was based on $260K in seller’s discretionary cash flow. But: ❌ Inventory was not included but was being purchased separately❌ Owner took home $80K in cash sales annually—not reported❌ No CapEx allowance for cooler replacement❌ Payroll did not include 2 working family members ❌ Over $50K of inventory constituted … Continue reading ⚠️ Red Flag Case Study: The $50K Shrinkage Surprise

 🍷 Liquor store valuations are often oversimplified—but they come with unique risks: Inventory misclassified or misvalued High reliance on cash sales or unrecorded revenue Unrealistic gross margins compared to industry benchmarks Owner’s lifestyle expenses flowing through the P&L 📌 Inventory cycles, weekend labor coverage, and shrinkage all matter when estimating cash flow.

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An auto shop was under contract at $850K based on $175K in cash flow. But we found: ❌ 2 sons working full-time, unpaid❌ Equipment over 15 years old—no CapEx budget❌ Addbacks included gas, phone, and home office Adjusted free cash flow? ~$65KTrue value? ~$440K ✅ Lender restructured. ✅ Buyer avoided overpaying.

 🚗 Auto repair shop valuations often break down when they: Ignore technician wages for family labor Miss hidden CapEx (lifts, tools, diagnostic equipment) Use unadjusted revenue during boom years Underestimate customer churn or brand dependency 📌 Normalizing for labor and reinvestment is critical. A $90K free cash flow that ignores $60K in replacement labor… isn’t … Continue reading 🧠 Valuation Insight: Auto Shops Run on More Than Oil

📘 Just released: Our HVAC Business Valuation Checklist Covers:✅ CapEx + fleet replacement✅ Owner labor vs. market comp✅ Seasonality adjustments✅ Service vs. install revenue✅ FMV vs. book value of equipment 📩 Click here to grab your copy.

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 … Continue reading ⚠️ Red Flag Case Study: One Truck, One Hot Summer

 HVAC company valuations often miss the mark because they: Ignore seasonal swings Understate CapEx for trucks, tools, or tech Treat one-time commercial jobs as recurring Fail to adjust for technician wages or owner field labor 📌 Cash flow must reflect recurring maintenance—not a spike from one summer heat wave. ✅ Normalize earnings, fleet replacement, and … Continue reading 🧠 Valuation Insight: HVAC Cash Flow Needs a Tune-Up