ClearValue Advisory
Page 1
Confidential — Snapshot Valuation Report
Section 1 of 6
Executive Summary
Key metrics and value scorecard for Desert Sun HVAC.
Estimated Value
$1,324,750
Range: $1,135,500 – $1,514,000
Owner Earnings (SDE)
$378,500
Weighted 3-year average
Applied Multiple
3.5×
Range: 3.0× – 4.0×
SBA Financeability
✓ Likely Financeable
DSCR 1.96× (threshold 1.25×)
FF&E / Asset Value
Not provided
Included in business transfer
Most Likely Buyer
Owner Operator
SBA-eligible acquisition target
Value Driver Scorecard
Customer Diversification
Moderate
Owner Dependency
Needs Review
Financial Verification
Needs Review
Documentation (SOPs)
Needs Review
What Increases Value
✓ Strong owner earnings — $378,500 weighted SDE
✓ SBA financeable — DSCR 1.96× exceeds minimum
✓ Established business with recurring customer base
What May Reduce Value
⚠ Financials not independently verified by CPA
⚠ Standard operating procedures not documented
⚠ Owner work hours and transition plan not assessed
Recommended Next Steps
1
Verify Financials with a CPA
Increases buyer confidence and may improve multiple by 0.25–0.50×
2
Document SOPs
Shows buyers the business runs without you, reducing transition risk
3
Prepare Transition Plan
Define what a 90-day seller transition looks like to address buyer concerns
4
Provide YTD Financials
Current-year performance significantly affects buyer perception and SBA approval
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Page 2
Confidential — Snapshot Valuation Report
Section 2 of 6
Revenue Trends & Owner Earnings
Three-year financial performance and step-by-step SDE derivation. All figures from owner-provided records.
Revenue vs. Owner Earnings (SDE) — 3-Year Trend
| Year | Revenue | YoY | Net Profit | SDE | Margin |
|---|
| 2023 | $1,600,000 | — | $155,000* | $310,000 | 19% |
| 2024 | $1,850,000 | ▲ 16% | $200,000* | $355,000 | 19% |
| 2025 | $2,400,000 | ▲ 30% | $265,000 | $420,000 | 18% |
| Weighted SDE (50/30/20) | $378,500 | — |
* Prior-year net profit estimated proportionally from 2025 margin. Provide actual figures for prior years to improve accuracy.
SDE Derivation — 2025 (Base Year)
Net Profit (Before Tax)
$265,000
+ Owner Compensation
$95,000
+ Payroll Tax (7.65%)
$7,268
+ Health Insurance
$14,400
+ Vehicle / Auto Expense
$14,400
+ Depreciation & Amort.
$24,000
Owner Earnings (SDE) — 2025
$420,068
Weighted SDE Calculation
| Year | SDE | Weight | Contribution |
|---|
| 2025 Most Recent | $420,000 | 50% | $210,000 |
| 2024 | $355,000 | 30% | $106,500 |
| 2023 | $310,000 | 20% | $62,000 |
| Weighted SDE | $378,500 |
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Page 3
Confidential — Snapshot Valuation Report
Section 3 of 6
Valuation Scenarios
Three scenarios using the Weighted SDE of $378,500 and the applied multiple range.
All scenarios use the Weighted SDE: $378,500 (blended: 50/30/20 weighting). The applied multiple reflects industry comps for comparable HVAC businesses at this revenue and SDE level.
Conservative
$1,135,500
$378,500 × 3.0×
Quick sale, limited buyer competition, or seller concessions required.
Expected Value
$1,324,750
$378,500 × 3.5×
Most likely outcome in a professionally marketed sale with qualified buyers.
Current Estimate
Optimistic
$1,514,000
$378,500 × 4.0×
Strategic buyer, competitive bidding process, and favorable market timing.
$1,324,750
→ + $189,250 potential →
$1,514,000
| Scenario | Multiple | Indicated Value | Key Driver |
|---|
| Conservative | 3.0× | $1,135,500 | Buyer applies risk discount; seller may need to concede on price |
| Most Likely | 3.5× | $1,324,750 | Standard market comp; SBA financing supports full-price deal |
| Optimistic | 4.0× | $1,514,000 | Verified financials, documented operations, competitive environment |
Computed for Planning Purposes. This valuation is based on self-reported financial information and has not been independently verified. The Most Likely scenario reflects current market conditions for comparable businesses in the Home Services sector. Buyers will conduct due diligence that may adjust this range.
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Page 4
Confidential — Snapshot Valuation Report
Section 4 of 6
Buyer Profile & SBA Financing
Most likely buyer types, what they evaluate, and estimated SBA loan structure at the expected value.
Primary Buyer
Owner Operator
SBA EligibleMost Likely
Why They Would Buy
- ✓ Strong, consistent owner earnings ($378,500)
- ✓ SBA financeable — low down payment to acquire
- ✓ Established HVAC business with 60% recurring revenue
Potential Deal Concerns
- ⚠ Financials not CPA-reviewed — triggers SBA scrutiny
- ⚠ No documented SOPs — raises transition risk concerns
Secondary Buyer
Strategic / Competitor
Cash / Faster Close
Why They Would Buy
- ✓ Geographic expansion into established Las Vegas territory
- ✓ Acquires trained workforce and 1,800+ customer relationships
May pay 10–20% above market for strategic fit. Less reliant on SBA — can move faster with a cash offer.
Unlikely Buyer
Private Equity / Search Fund
- ⚠ SOPs and documented systems required — missing
- ⚠ EBITDA margin insufficient for typical PE return targets
SBA Financing Snapshot — at $1,324,750 Purchase Price
| Purchase Price (Business) | $1,324,750 |
| Weighted SDE | $378,500 |
| FF&E / Asset Value | Not provided |
| Buyer Down Payment (10%) | $132,475 |
| SBA 7(a) Loan Amount | $1,192,275 |
| Est. Interest Rate | 10.50% |
| Loan Term | 10 Years |
| Est. Monthly Payment | $16,090 |
| Est. Annual Debt Service | $193,080 |
1.96×
DSCR (SBA threshold: 1.25×)
0×1.25×4×
✓ Likely Financeable
SBA Impact on Buyer Pool: Because this business qualifies for SBA financing, the eligible buyer pool is significantly larger. SBA loans require only 10% down ($132,475), enabling buyers who cannot afford $1,324,750 cash to compete. This typically increases both the number of offers and final sale price.
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Page 5
Confidential — Snapshot Valuation Report
Section 5 of 6
How to Increase Business Value
Prioritized improvements based on your specific business profile. Highest-impact actions listed first.
Current Estimated Value
$1,324,750
At 3.5× with current risk factors
→
Potential After Improvements
$1,514,000+
At 4.0× with verified financials & documented operations
1
Verify Financials with a CPA
CPA-reviewed or audited P&L statements dramatically increase buyer confidence and satisfy SBA lender requirements. This single step can improve your applicable multiple by 0.25–0.50×.
High Impact
2
Reduce Owner Dependence
Delegate more operational decisions to a lead employee or manager. Even 6–12 months of delegation history before going to market significantly reduces buyer transition risk perception.
High Impact
3
Document Standard Operating Procedures
Written SOPs for service delivery and customer communication show buyers the business can run without you. Critical for reducing the “key man” risk discount buyers apply.
Moderate
4
Provide Current-Year YTD Financials
Current-year performance significantly affects buyer confidence and may support a higher multiple. Buyers and SBA lenders increasingly require current-year data before making offers.
Moderate
5
Organize Add-Back Documentation
For each add-back, prepare supporting documentation (pay stubs, insurance invoices, vehicle receipts). Buyers and lenders scrutinize add-backs closely during due diligence.
Moderate
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Page 6
Confidential — Snapshot Valuation Report
Section 6 of 6 — Appendix
SDE Schedule, Methodology & Verification Checklist
Detailed add-back schedule for all years, valuation methodology summary, and due diligence preparation guide.
SDE Reconstruction — All Years
| Line Item | 2023 | 2024 | 2025 |
|---|
| Total Revenue | $1,600,000 | $1,850,000 | $2,400,000 |
| Net Profit (as reported) | $155,000 | $200,000 | $265,000 |
| + Owner Compensation | $95,000 | $95,000 | $95,000 |
| + Payroll Tax (7.65%) | $7,268 | $7,268 | $7,268 |
| + Health Insurance | $14,400 | $14,400 | $14,400 |
| + Vehicle / Auto Expense | $14,400 | $14,400 | $14,400 |
| + Depreciation & Amort. | $24,000 | $24,000 | $24,000 |
| Owner Earnings (SDE) | $310,068 | $355,068 | $420,068 |
Add-backs for prior years use 2025 amounts. Net profit for 2023–2024 estimated proportionally; provide actual tax returns for greater accuracy. All figures are owner-reported and have not been independently verified.
Due Diligence Preparation — Priority Items
High
3 Years P&L Statements
Primary document buyers and SBA lenders review to verify income.
High
3 Years Business Tax Returns
Confirms P&L accuracy; reveals discrepancies buyers will probe.
High
Current Year YTD P&L
Buyers want current performance to avoid deal price renegotiation.
High
FF&E List with Values
SBA collateral requirement; buyer needs to know what transfers.
Med
Customer List (Top 10)
Concentration risk is top buyer concern — one large customer = deal risk.
Med
Bank Statements (12 mo)
Validates cash flow matches reported revenue; SBA lender standard.
Valuation Methodology
ClearValue Snapshot Reports use a weighted SDE multiple approach — the industry standard for owner-operated businesses in the $500K–$5M value range. Consistent with SBA 7(a) lender underwriting standards, M&A broker market practice (IBBA standards), and Business Valuation Resources (BVR) transaction data. The 50/30/20 weighting gives greater importance to more recent performance.
This method does not include: DCF / discounted cash flow, asset-based valuation, revenue multiples, or comparable company analysis. A formal appraisal by a Certified Business Appraiser (CBA) may differ from this estimate.
Disclosure: All financial figures are owner-reported and have not been independently verified by ClearValue Advisory. A prospective buyer should request source documentation during due diligence. This report does not constitute a USPAP-compliant business appraisal.
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