Sample
Business Valuation Report
Desert Sun HVAC Services LLC
Opinion of Value — Full Advisory Methodology
Prepared by
Business Sale & Acquisition Sample
Date
July 3, 2026
Valuation Date
December 31, 2023
Confidential — Do Not Distribute
Scope of Opinion & Valuation Disclaimer

This Business Valuation Report has been prepared by Business Sale & Acquisition Sample on behalf of Desert Sun HVAC Services LLC for the purpose of facilitating a potential sale transaction. This report represents a broker's opinion of value and does not constitute a certified business appraisal as defined by the American Institute of Certified Public Accountants (AICPA) or the American Society of Appraisers (ASA).

The valuation conclusions expressed herein are based on financial information provided by the business owner, publicly available industry data, and comparable transaction data from recognized M&A databases. The Advisor has not independently audited, verified, or reviewed the underlying financial statements, tax returns, or other source documents referenced herein.

The reader is cautioned that actual transaction values may differ materially from the ranges presented in this report due to market conditions, buyer/seller negotiations, due diligence findings, financing availability, and other factors outside the control of the Advisor.

Valuation Date: December 31, 2023 · Report Date: July 2, 2026
Business Sale & Acquisition Sample · Powered by ClearValue Advisory
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Business Sale & Acquisition Sample

Business Valuation Report — Contents

  1. Opinion of Value
  2. SDE Normalization Schedule
  3. Valuation Methodology
  4. Industry Multiples Analysis
  5. Three-Scenario Price Range
  6. SBA Financing Analysis
  7. Value Driver Scorecard
  8. Risk & Opportunity Assessment

ClearValue Advisory — Financial Analysis

3-Year Performance & Valuation Summary

Desert Sun HVAC Services
July 2026  ·  Confidential
Recommended List Price
$3,675,000
8.15× Seller's Discretionary Earnings  ·  Range: $3.15M – $4.2M
Seller's Disc. Earnings
$451K
Most recent year
Applied Multiple
8.15×
Industry median
Annual Revenue
$2.8M
Most recent year
Annual Revenue
3-year revenue trend
$3.36M $2.24M $1.12M $2.1M 2023 +14.3%↑ $2.4M 2024 +16.7%↑ $2.8M 2025
Seller's Discretionary Earnings (SDE)
Owner earnings growing year over year
$541K $361K $180K $350K 2023 +12.0%↑ $392K 2024 +15.1%↑ $451K 2025
Valuation Range — Enterprise Value Scenarios (Primary Method)
SDE × industry multiple. Enterprise value before debt adjustment.
$0 $1.16M $2.31M $3.47M $4.62M Conservative 7.00× $3.15M Most Likely 8.15× Recommended List Price: $3,675,000 Optimistic 9.30× $4.2M
Method Comparison — SDE Primary / Revenue Corroboration
SDE Multiple is the primary method. Revenue Multiple confirms market range.
SDE Multiple (Primary) RECOMMENDED RANGE $3.15M – $4.2M Revenue Multiple (Corroboration) MARKET CHECK $2.24M – $3.36M
Confidential — For listing purposes only. Not a solicitation to purchase or sell securities.
ClearValue Advisory  ·  Financial Analysis · Page 1
Desert Sun HVAC Services  ·  Confidential
Business Quality & Earnings Analysis
July 2026  ·  Page 2
How Owner Earnings Are Calculated — 2025
SDE = Net Profit + Owner Compensation + Add-Backs. Add-backs are owner expenses a buyer would not incur.
$541K $406K $271K $135K $225K Net Profit + $92K Owner Comp + $134K Add-Backs = $451K SDE Total
Owner Earnings Growth — Year Over Year
SDE growing consistently — indicates improving operational efficiency
$550K $367K $183K $350K 2023 +$42K +12.0%↑ $392K 2024 +$59K +15.1%↑ $451K 2025
Confidential — For listing purposes only. Not a solicitation to purchase or sell securities.
ClearValue Advisory  ·  Financial Analysis · Page 2
Sample

Business Valuation Report

Asking Price
$3,675,000
Estimated Range: $3,150,000 – $4,200,000
Weighted SDE
$1,050,000
EBITDA (FY2023)
$892,000
Revenue (FY2023)
$4,820,000
Valuation Basis
SDE Multiple
FY2023 SDE
$1,148,000
After all add-backs
FY2022 SDE
$1,020,000
+13.9% YoY growth
FY2021 SDE
$896,000
Baseline year
Weighted SDE
$1,050,000
50/30/20 blend
SDE Multiple
3.5×
Base case

SDE Normalization Schedule

Seller's Discretionary Earnings (SDE) represents the total financial benefit a working owner derives from the business, normalizing for non-recurring and discretionary items to reveal the true earning power of the enterprise.

ItemFY2021FY2022FY2023
Net Income (Tax Return Basis)$426,000$528,000$636,000
Add: Owner's Salary & Benefits$154,000$206,000$256,000
Add: Depreciation & Amortization$118,000$134,000$148,000
Add: Interest Expense$42,000$38,000$31,000
Add: Owner Personal Vehicle (Non-Business)$18,400$19,200$22,000
Add: Owner Cell & Personal Travel$8,200$9,400$11,400
Add: One-Time Equipment Repair (Non-Recurring)$0$0$28,600
Less: Market-Rate Manager Replacement($62,000)($68,000)($72,000)
Less: Estimated Capex Replacement Reserve($208,600)($47,600)($113,000)
Adjusted SDE$896,000$1,019,000$1,148,000

Three-Scenario Price Range

The valuation is presented in three scenarios based on multiple ranges observed in comparable HVAC business transactions in the Southwest US market (2022–2025 closed transactions, BizBuySell, PriceData, IBBA database).

Conservative
$3,150,000
3.0× weighted SDE · Lower-end multiple reflecting increased seller-financing risk or limited transition support
Base (Recommended)
$3,675,000
3.5× weighted SDE · Reflects recurring contract base, NATE-certified team, and strong market position
Optimistic
$4,200,000
4.0× weighted SDE · Achievable with strategic buyer, growth premium, or competitive bidding process

SBA Financing Analysis

The following financing structure illustrates the cash-on-cash return profile for a qualified buyer using SBA 7(a) financing at market rates. Desert Sun's debt service coverage ratio of 2.25× comfortably exceeds the SBA minimum threshold of 1.25×.

SBA Financing DetailAmount
Recommended List Price$3,675,000
SBA Buyer Down Payment (20%)$735,000
SBA Loan Amount (80%)$2,940,000
Estimated SBA Rate10.5% (Prime + 2.75%)
Loan Term10 Years
Estimated Monthly Debt Service$38,900/mo
Estimated Annual Debt Service$466,800/yr
Weighted SDE (Earnings Available for Debt)$1,050,000/yr
Debt Service Coverage Ratio (DSCR)2.25×
Annual Cash Flow After Debt Service$583,200/yr ($48,600/mo)
Cash-on-Cash Return on Down Payment79.3%
Buyer Takeaway: At the base price of $3,675,000, a buyer investing $735,000 down would receive approximately $48,600/month in cash flow after debt service — a 79.3% annual cash-on-cash return on the down payment, based on stabilized weighted earnings.

Value Driver Scorecard

Value DriverRatingCommentary
Revenue Growth TrajectoryStrong3-year CAGR of 10.0%; no single year of decline
Recurring Revenue BaseStrong340+ annual maintenance contracts; 25% of revenue
Customer ConcentrationModerateTop 10 clients = 18% of revenue; acceptable concentration
Owner DependencyModerateOwner handles business development; field ops independent
Staff Quality & RetentionStrongNATE-certified team; avg tenure 8.4 years
Competitive PositionStrongTop-10 HVAC contractor in service territory by revenue
Facility & EquipmentModerateMonth-to-month lease; equipment in good condition
Financial DocumentationStrongClean 3-year P&L; tax returns available