What this section means
This is the simple snapshot: what the business is, what the seller wants, what the seller claims it earns, and the first-pass OwnerPath decision.
Sample Deal Walkthrough
Mountain West HVAC Services
Beginner decisionPrice looks too high
ConfidenceMedium
Supportable offer$940k-$1.02M
This sample shows how OwnerPath teaches while it analyzes. The business may be worth a broker call, but the asking price does not work after unsupported seller adjustments are removed. The buyer should not submit an early offer letter until tax returns, payroll, addback support, lease transfer, and lender comfort are reviewed.
1. What This Deal Is
What OwnerPath found
HVAC service company, $1.25M asking price, $1.82M revenue, $410k seller-claimed cash flow, and a price-looks-too-high recommendation.
Why it matters
The asking price only makes sense if the seller's cash-flow claim is real and financeable.
What to ask next
Ask for tax returns, monthly P&Ls, addback support, payroll, lease assignment language, customer concentration, and owner weekly hours.
2. Plain-English Terms
Seller cash flow (SDE)
The seller's claimed yearly owner benefit before your loan payment. It is useful, but it needs proof.
Loan-payment cushion (DSCR)
Whether the business appears to make enough money to cover loan payments with room to spare.
Seller adjustments
Expenses the seller says should be added back to profit. Some are real. Some are not.
Early offer letter (LOI)
A non-final offer letter. Have important terms reviewed before signing.
3. Key Numbers
Asking price$1.25MWhat the seller wants.
Revenue$1.82MSales before expenses.
Seller cash flow$410kSeller's profit claim.
OwnerPath adjusted cash flow$318kMore cautious view after weak adjustments.
Payment cushion at asking1.11xThin for debt payments.
Supportable offer range$940k-$1.02MBased on current proof.
4. Seller Cash Flow Check
What this section means: OwnerPath does not treat every seller adjustment as real profit. It reduces cash flow when adjustments are unsupported, recurring, personal, or not tied to documents.
| Seller adjustment | Seller claim | OwnerPath treatment | What could go wrong |
|---|---|---|---|
| Owner auto | $18k | $8k accepted | Personal use may not be fully removable. |
| Family payroll | $42k | $0 accepted | Payroll may be needed to replace real work. |
| One-time legal | $21k | $21k accepted if documented | Needs invoice or tax support. |
| Travel/meals | $16k | $4k accepted | May be normal business expense. |
| Total removed | $97k claimed | $64k removed | Seller cash flow may be overstated. |
5. Payment Check
Why it matters: A business can look profitable but still fail if debt payments consume too much cash. OwnerPath estimates payment cushion, but a lender must verify repayment ability and eligibility.
Buyer cash$125k
Seller note$125k
Bank/SBA-style loan$1.0M
Annual debt payment$286k
Cushion at asking1.11x
Cushion after lower price1.32x
How this is calculated
OwnerPath estimates the annual loan payment, then compares it with adjusted seller cash flow. A 1.25x cushion means the business is modeled to make about $1.25 for every $1.00 of annual debt payments.
6. Proof Needed
- Three years filed tax returns
- Monthly P&Ls
- Addback support
- Payroll register
- Lease and assignment clause
- Customer concentration report
- Employee roster
- Seller role and weekly hours
7. Red Flags
- Seller cash flow may be inflated: weak adjustments removed.
- Payment cushion is thin: asking price does not leave much room.
- Lease may not transfer: landlord consent must be reviewed.
- Owner role unclear: buyer needs to know what work must be replaced.
8. Questions To Ask The Broker
Thanks for sharing this business. Before we discuss offer terms, can you confirm what proof is available for seller cash flow, owner role, lease transfer, employee retention, and customer concentration?
Please provide three years of filed tax returns, monthly P&Ls, addback support, payroll register, lease assignment language, customer concentration summary, and seller transition expectations after any required NDA.
Draft-only reminder: Review before sending. OwnerPath does not send broker emails automatically.
9. What Not To Do Yet
Do not submit an offer letter yet
The proof package is incomplete.
Do not trust the seller cash flow yet
Unsupported adjustments changed the deal math.
Do not assume financing is available
The lender must verify repayment ability, eligibility, and buyer fit.
Do not skip attorney review
Lease transfer, offer terms, closing conditions, liabilities, and contracts matter.
Professional-Review Warning
OwnerPath is decision-support software. It is not legal, tax, accounting, lending, valuation, brokerage, insurance, or investment advice. Verify outputs with source documents and qualified professionals before submitting an offer, signing documents, or closing.