Tree care contractor, EMR above 1.0, aged fleet at book value, storm revenue as primary revenue driver
§ 01 · Observed
What was documented in diligence.
Workers comp EMR 1.31 — three claims over $50,000 in trailing 5 years including one OSHA recordable fatality in year 3. Assigned-risk plan at new entity quoted 24% of payroll vs. seller's current 12% of payroll — $62,000 annual cost increase. Fleet: crane truck (14 years), bucket truck (12 years), chipper (9 years) — book value $218,000; independent appraiser valued at $83,000 (38% of book). Storm and emergency revenue: 64% of trailing total; 3-year normalized storm revenue is 41% of trailing period level. No ISA certification on staff — owner has no ISA credential and never held one. Municipal contracts: none (require ISA on file). Equipment collateral appraisal at liquidation value: $48,000 — well below SBA collateral requirements for the loan amount requested.
§ 02 · Outcome
What happened.
Buyer submitted LOI at 2.1× stated SDE. After insurance cost step-up, storm normalization, and fleet capex reserve, adjusted SDE declined 64%. SBA lender declined: DSCR 0.74×, equipment collateral insufficient, EMR above acceptable threshold. Deal terminated.
§ 03 · Structural Pattern
How this deal fits the four-pillar framework.
Lower-band conditions on all four pillars: EMR above 1.0 creating insurability and cost issues, fleet at book value with 38% appraised recovery, storm revenue dominating a trailing period that is not representative of steady-state, and no ISA certification for bid qualification. The EMR and equipment collateral shortfall independently blocked SBA financing.
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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