Pest control route, 78% revenue in one zip code, monthly churn above 5%
§ 01 · Observed
What was documented in diligence.
Customer management software export showed 5.4% monthly churn on the recurring base — requiring 65% annual replacement of the customer base just to hold revenue flat. Geographic concentration: 78% of stops within one zip code bordered by a regional pest control franchise that began undercutting prices 8 months prior. No written service agreements with any customer. Owner is sole pesticide applicator; state requires re-examination, no other licensed staff. Total customer count declining 11% year-over-year on trailing 12-month comparison.
§ 02 · Outcome
What happened.
Buyer submitted LOI at 3.8× SDE. After churn normalization, geographic concentration discount, and owner-applicator cost restoration, adjusted SDE declined 47%. Deal terminated — repriced multiple was not fundable under SBA guidelines.
§ 03 · Structural Pattern
How this deal fits the four-pillar framework.
Lower-band conditions across all four pillars: high churn masking revenue instability, geographic concentration with active competitive pressure, owner-only license, and informal customer arrangements. The deal was presented without cohort data; churn surfaced during diligence.
This is an anonymized composite drawn from observable structural patterns in the sample window. It is not a specific deal. The structural pattern, band placement, and outcome reflect commonly observed combinations; a future consented case study will replace this entry.
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