THE BUYER'S BRIEF - FULL DEAL BREAKDOWN
Insurance Restoration Franchise | Florida | $1,195,000
An insurance restoration franchise in Florida is asking $1.195 million. Revenue: $1.1 million. Cash flow: $262,000. The broker leads with $512,000 in assets included and an SBA pre-qualified tag. On paper this looks like a sophisticated deal. Then you run the cash flow math and it falls apart.
THE DEAL SNAPSHOT
Industry | Insurance Restoration (Water, Fire, Mold) |
Location | Florida |
Asking Price | $1,195,000 |
Annual Revenue | $1,114,000 |
Cash Flow (SDE) | $262,000 |
Assets Included | $512,000 (equipment, vehicles, fixtures) |
Years Established | Approximately 3 years |
Operator Model | Owner operated, 3 crews, under 5 employees |
Structure Type | Franchise resale, CPR Gold status |
Reason for Sale | Owner relocating out of the country |
BULLETPROOF SCORE CARD
CRITERION | TARGET | ACTUAL | VERDICT |
Stress DSCR (20% rev decline) | ≥ 2.0x | 1.30x | FAIL |
Purchase Multiple | ≤ 3.0x | 4.56x | FAIL |
Owner Cash Flow | > $100K/yr | $26K/yr | FAIL |
Working Capital (3+ mo) | $279K+ | Not disclosed | INCOMPLETE |
Clean 80/10/10 Structure | 80/10/10 | No note specified | INCOMPLETE |
THE 80/10/10 SUMMARY
Running this through the standard Bulletproof structure - $956K SBA loan at 10.5% over 10 years, plus a 10% seller note at 5% interest-only, plus 10% buyer down - the numbers don't just tighten. They collapse.
Run your own numbers at DealScorePro - you can plug this listing in and see the math fail in 60 seconds.
Cash In (10% down + working capital + closing) | Approximately $428,000 |
Annual Cash Flow After Debt and GM Replacement | $26,145 |
Payback Period on Down Payment | 54.8 months (4.6 years) |
Stress DSCR at 20% revenue decline | 1.30x (dangerously close to lender covenant) |
WHAT'S WORKING
There are real assets here. $512K in professional restoration equipment, vehicles, a fully equipped warehouse, and calibrated specialty gear is not nothing. Insurance-driven restoration is a genuinely resilient category - property damage doesn't care about recessions or discretionary spending. The three active crews and capacity to scale to five without additional capital is a real operational asset. The CPR Gold status and carrier preferred-vendor relationships are the kind of intangibles that take years to build. If you stripped this business out of the franchise system and bought the assets at fair market value, there's a legitimate business here.
WATCH OUT FOR
The price is the problem, and it's not close. A 4.56x multiple on $262K of SDE is asking the buyer to pay $1.2 million for a business that clears the buyer $26,000 a year after debt service and a replacement salary. That is not a business. That is a job with a million-dollar mortgage. The owner cash flow failure is the deal-killer here - everything else is noise next to it.
The $512K in assets is a trap in plain sight. SBA financing prices businesses on cash flow, not asset value. You can't pay yourself with a dehumidifier. Assets only matter in two scenarios: liquidation and collateral. If you liquidate, the $1.2M ask becomes $512K of asset recovery, and you're underwater by $680K on day one. If the assets are collateral, the lender already knows that and they're still going to price the loan based on your ability to service it from cash flow.
The 2023 founding date and the owner relocating out of the country is a pattern worth respecting. This is a three-year-old franchise resale. The classic business acquisition pattern is a 15-to-30-year owner selling for retirement. A three-year owner leaving the country is a different story. Either the business hasn't scaled the way the franchise system promised, or the owner is geographically motivated and the numbers are fine, or there's something in the pipeline the buyer won't see until after closing. You have to answer that question in diligence, not assume it's benign.
Franchise royalty is the quiet killer. Most restoration franchises charge 6 to 10 percent of gross revenue in royalties, plus marketing co-op fees. On $1.1M of revenue, that's $66K to $110K per year going to corporate. If that's already netted out of the $262K SDE, fine. If it's not - and the listing doesn't say - real SDE is closer to $150K to $200K and the scorecard gets worse. Ask the seller in writing.
Stress DSCR of 1.30x is covenant trigger territory. SBA loans typically include a 1.25x DSCR covenant. If you hit a bad quarter, a bad insurance year, or a dry stretch between weather events, you could be in technical default within months. The lender will renegotiate. They will not forgive.
THE ANALYSIS
Here's what 35 years has proven. When a broker leads with asset value and pre-qualification tags, they are distracting you from the cash flow. And cash flow is the only thing the SBA, the lender, your tax return, and your grocery bill actually care about. Every sophisticated-sounding feature on this listing - the CPR Gold status, the insurance carrier relationships, the 400 pieces of equipment, the pre-qualified SBA approval - is real. None of it changes the fact that you would clear $26K a year after servicing the debt and paying yourself a market wage.
The expansion story is the tell. "Ability to scale operations to 5 crews without significant additional capital" is the broker's way of telling you the business at current scale does not justify the ask. You are being asked to pay today's price for tomorrow's cash flow, funded by debt you take on at closing. If the business could sustain five crews today, it would have five crews today. It doesn't. So you would be paying for growth that is your job to execute, with your capital, while personally guaranteeing a million dollars of SBA debt to a seller who is taking their check and leaving the country.
The fix for a deal like this is simple. The business is worth roughly 2.5x real SDE for a franchise resale of this vintage, which puts it in the $550K to $650K range assuming franchise royalty is already netted. If real SDE is lower, the number is lower. A 10 percent seller note with a revenue retention clause and a personal guarantee from the exiting owner would be non-negotiable. If the seller says no, walk. Plug the same business at $600K into DealScore Pro and watch it move from 0 of 5 to 3 or 4 of 5. Same business. Different price. Completely different outcome.
MIKE'S VERDICT
PASS
Score of 0 out of 5, with three hard fails on the core financial criteria and two Incompletes. This is what a well-dressed bad deal looks like. Insurance restoration is a good category. This particular business has real assets and real relationships. But at $1.195M on $262K of SDE, the buyer clears $26K per year after debt and would need 55 months just to recover the down payment, all while carrying a covenant-adjacent stress DSCR and a personal guarantee. Walk, or come back at 2.5x SDE with a real note. Don't let the asset value and the franchise polish talk you out of the math.
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