Independent restoration business, TPA partially owner-registered, AR cycle 74 days
§ 01 · Observed
What was documented in diligence.
TPA programs: Contractor Connection entity-registered (transferable); State Farm preferred contractor registered under owner's personal credentials — re-qualification required under new ownership. AR aging: 74-day average with $84,000 in 90+ day receivables from one large commercial loss claim under supplement dispute. Supplement settlement rate 71% — below the 80%+ benchmark for top-of-band. Accrual-cash gap: $142,000 on trailing 12-month P&L vs. cash deposits — lender adjusted SDE down $142,000 for underwriting. Franchise royalty (7% revenue) was excluded from broker SDE; adding it reduced stated SDE by $68,000.
§ 02 · Outcome
What happened.
Initial ask 4.2× broker SDE. After franchise royalty correction, accrual-cash adjustment, and TPA partial-loss discount, adjusted SDE declined 31%. Repriced to 3.1× adjusted SDE. State Farm TPA re-qualification risk priced into seller note structure. Closed at 3.1× with $80,000 seller note contingent on TPA re-qualification.
§ 03 · Structural Pattern
How this deal fits the four-pillar framework.
Mid-band placement reflects the convergence of partial TPA transferability risk, accrual-cash timing gap, and franchise royalty omission — three independent earnings quality issues that individually would each compress the multiple. Combined, they repriced the deal from top-of-band to mid-band.
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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