The Best Numbers I Have Seen This Month. The Wrong Country.

Every number in this listing is the kind I tell you to look for. And I would still be careful before I wrote the check.

Sixty percent gross margins. $917,000 in seller's discretionary earnings on $2.4M in revenue. A 1.96x multiple, which is cheap for a business throwing off this much cash. Debt-free, with cash in the bank and a backlog into next year. On the raw fundamentals, this is one of the strongest deals to cross my desk this month. So why am I telling you to slow down? Because the two things that decide whether you can actually buy this the way I teach are the two things this listing is built to keep you from looking at.

BY THE NUMBERS

Asking: $1,800,000

Cash flow: $917,000

Score: 4/5 on the math, structure fail on SBA eligibility - Worth a Look (doable with Canadian financing)

The Deal Snapshot

Here is the deal stripped to the numbers, anonymized but accurate to the listing.

Read that snapshot and your instinct is to lean in. A 1.96x multiple on $917K of cash flow is the kind of price that makes experienced buyers move fast. The margins are exceptional, the balance sheet is clean, and the operating platform is documented. The trouble is not in this table. The trouble is in the structure line at the bottom, and in a year of financials that is not in this table at all.

Bulletproof Score Card

Same five criteria, every deal. Here is where this one lands.

Bulletproof Score: 4/5 on the math, but a structural FAIL on financing - WORTH A LOOK

The 80/10/10 Deal Structure

Here is where the deal comes apart, and it has nothing to do with the math. The 80/10/10 I teach runs on an SBA 7(a) loan: the US government guarantees 80% of the purchase, a seller note covers 10%, and you put 10% down. On a deal like this, that would mean roughly $180,000 of your own money to control a business earning close to $1M a year. That is the whole point of the method.

This deal cannot use it. SBA 7(a) financing is a United States program. It does not fund the acquisition of a business in Alberta, Canada. So the engine that makes the 80/10/10 work simply is not available here. What the seller is actually offering is a share sale for cash, with openness to 15 to 20% vendor financing. Run that out and the picture changes completely.

Your cash at close (no SBA, 20% vendor note): roughly $1,440,000, plus $150,000 of inventory that is not included in the price, plus working capital

Your realistic cash in: well north of $2,000,000, versus the ~$180,000 the 80/10/10 would have required

Debt service: nearly irrelevant here. With little to no bank debt, DSCR is not the constraint. The cash to close is the constraint.

Now, here is what most buyers get wrong about a deal like this. They hear no SBA and they assume no deal. That is not the case. The SBA being off the table does not kill this acquisition. It just means you stop reaching for the American tool and start using the Canadian ones. The 80/10/10 fails the structure test as written, and that is why it scores a fail. But a deal this clean, this profitable, and this debt-free is exactly the kind a Canadian lender wants to fund. You do not walk away. You re-engineer the structure.

So how do you actually structure this without the SBA? You build it on three legs instead of the usual two. First, a senior acquisition loan from a Canadian lender. The Business Development Bank of Canada and most chartered banks write acquisition term debt, and a debt-free business with 60% margins and a documented platform is squarely the kind of file they compete to fund. Second, and this is where you make the deal safer, you push the seller note far harder than a normal sale would. Vendor takebacks in Canada usually land in the 10 to 25% range, and this seller opened at 15 to 20%. I would push for 40 to 45%, structured on standby behind the bank for the first two years. That is an aggressive ask and a motivated seller is what makes it possible, but the reason to fight for it is simple: every extra point the seller carries is a point of their own money sitting at risk behind the lender. Third, your equity covers the rest.

Here is why that matters more than the math. This is a deal where the seller controls information you cannot see yet: a soft FY2025 they wave past in one sentence, and a stack of add-backs hidden behind an NDA. A vendor takeback is your insurance against exactly that. The seller's note sits in second position, behind the bank, on standby. If the business underperforms what they are claiming, the money at risk is theirs, not yours, because they only collect that note in full if the business actually delivers. At a 25% takeback the seller has about $450,000 riding on their own honesty. At a 45% takeback that jumps to roughly $810,000. That extra $360,000 of seller skin in the game is the cheapest diligence insurance you will ever negotiate. And if they refuse to carry it on a business they swear is this clean, that refusal tells you something too.

Now, does a bigger takeback also shrink your down payment? Sometimes, and here is the honest answer. It depends on whether your senior lender treats a fully-subordinated standby note as quasi-equity or as more debt. If the lender counts it toward the equity in the deal, your own cash can drop from around 15% to closer to 10%, taking your cash in from roughly $420,000 down to about $330,000. If the lender treats it as debt, your equity floor holds near 15% but you win a different way: the senior loan shrinks, your debt service falls, and your coverage climbs. Either path makes the deal safer. One frees up your cash, the other fattens your cushion. Picture the structure around 45% senior debt, 45% vendor takeback, and 10% your equity. Here is what the math does.

Your cash in: roughly $330,000 (about $180,000 equity plus $150,000 inventory) if the lender counts the standby note as equity, or about $420,000 if it does not. Either way, a fraction of the all-cash price the seller leads with.

Your annual cash flow after all debt: north of $640,000 even after paying yourself a market-rate manager, because the senior loan and the standby vendor note together run only about $198,000 a year.

Your DSCR: above 4.6x, and still above 3.7x after a 20% revenue drop. That is more cushion than the SBA version of this deal would have given you, and the fatter the vendor note, the more that cushion grows.

That is why the structure line scores a fail but the deal does not score a pass. The fail is specific: this is not an SBA-financeable 80/10/10 the way the method is written. The opportunity is real: with a Canadian senior lender and a vendor takeback pushed into the 40 to 45% range, the same business becomes very buyable, the leverage math comes out stronger than the SBA version, and most of the hidden-risk exposure sits on the seller's side of the table. You just have to build it the Canadian way, and negotiate the seller note hard, instead of forcing the American template onto it.

What's Working

•       The margins are genuinely rare. 60% gross margins, driven by preferred supplier pricing that smaller competitors cannot match, is a real structural moat. That is not a number you see often in installation businesses, where labor and materials usually grind margins down.

•       The price is attractive on its face. At a 1.96x SDE multiple, you are paying under two times earnings for a business that has been profitable every year of its compiled financials. If the earnings hold up under scrutiny, that is a strong entry price.

•       The balance sheet is clean. Debt-free, roughly $490K in cash, minimal capex, low working-capital needs. A clean balance sheet means fewer surprises hiding in the liabilities, and it gives you room to operate from day one.

•       The platform is built to transfer. Documented procedures, a field team that runs without the founder, real CRM and accounting systems, and a backlog over $1.5M into next year. That reduces the owner-dependency risk that sinks so many small acquisitions.

Watch Out For

•       The financials shown are FY2024, not the most recent year. The seller flags a FY2025 revenue dip and calls it a one-time effect of a partner exit and cleanup. Maybe. But the most recent year is the one you are buying into, and it is the one number they are asking you to take on faith. Demand the FY2025 statements before anything else, and judge the business on them, not on FY2024.

•       The EBITDA is normalized with add-backs you cannot see. The $815K figure leans on one-time, partner-era add-backs detailed only under NDA. Add-backs are where optimistic sellers rebuild earnings on paper. Until you see each one and judge whether it is truly non-recurring, treat the unadjusted number as the real number.

•       No SBA means you have to line up Canadian financing before you bid. An all-cash close is the wrong way to buy this. Get a Canadian senior lender lined up and negotiate the vendor takeback into the 40 to 45% range on standby. That keeps your cash in the low six figures and, more important, parks the seller's money behind the bank where it absorbs the risk of anything they have not shown you. Do not let the seller's cash framing convince you the deal needs a seven-figure check. It needs the right lender and a seller willing to carry real paper.

•       Inventory is not in the price. $150,000 in inventory sits outside the asking price. That is real money you add on top, and it is easy to miss when you are anchored on the headline number.

The Analysis

Here is the thing nobody mentions when a deal looks this good on the surface. A great business and a great deal for you are not automatically the same thing, and the gap between them is usually structure. This is a great business. Making it a great deal for the buyer I write for means refusing two reflexes at once. The first reflex is to assume that because the SBA is out, the deal is out. It is not. The 80/10/10 is not the only way to control a cash-flowing business with a small slice of your own money; it is just the American way. A Canadian senior loan plus a heavy vendor takeback gets you to the same place, with strong leverage and a bank sharing the risk. And on a deal where the seller is steering you past a soft year and add-backs you cannot see, the size of that seller note is your single best protection: the more they carry behind the bank, the more of their own money is on the line if the things they are not showing you turn out to matter. Build it on purpose. Do not default to the all-cash close the seller is quietly steering you toward.

Read between the lines on the financials and you see a seller managing the narrative carefully. They lead with FY2024, the strong year. They mention the FY2025 dip in a single sentence and immediately tell you not to worry about it. They normalize EBITDA with add-backs they will only show you after you sign an NDA. None of that is necessarily dishonest. Sellers present their best case; that is their job. Your job is to refuse to be walked past the soft spots. The most recent full year and the unadjusted earnings are the two numbers that decide this deal, and they are precisely the two the listing is structured to defer.

I have watched buyers fall for exactly this setup. A few months back I worked through a deal with a buyer who was ready to move fast because the trailing numbers were beautiful. When we finally pried the most recent year loose, revenue had slid and half the add-backs did not survive a second look. The business was still decent. It was not the business in the headline. The lesson stuck with him: the broker shows you the year that sells the deal, not the year you are buying. Banks will not catch this for you, and on a deal with no bank involved, nobody catches it but you.

After 35 years of looking at these, I have learned that the cleanest-looking listings deserve the hardest questions, not the fewest. The polish is doing a job. So do the work: confirm FY2025 holds up, confirm the add-backs are real, and line up a Canadian lender plus a fat seller note instead of a checkbook. Clear those, and a corporate buyer can absolutely own this with a sensible slice of equity. The structure is different from the SBA playbook. The discipline behind it is exactly the same.

A great business is not the same thing as a great deal for you.

MIKE'S VERDICT: WORTH A LOOK (REAL DEAL, DIFFERENT STRUCTURE)

On the fundamentals, this is one of the strongest businesses I have scored this month: rare margins, a clean balance sheet, a fair 1.96x multiple, and a platform built to transfer. It fails the structure test only in the narrow sense that it is not an SBA 80/10/10, because SBA money does not cross the border. That does not kill the deal. Swap in a Canadian senior lender, push the vendor takeback into the 40 to 45% range on standby, and put in 10 to 15% equity, and the same business buys for somewhere between $330K and $420K of your own cash with a DSCR above 4.6x. The leverage math comes out stronger than the SBA version, and the heavy seller note parks roughly $810K of the seller's own money behind the bank, where it covers you for anything the FY2025 numbers or the NDA add-backs are hiding. Verify those two things in diligence, line up the financing, negotiate the note hard, and this moves from Worth a Look toward a yes. Do not pay all cash, and do not walk away just because the SBA is off the table.

What This Means For You

If you are hunting deals right now, remember that no SBA does not mean no deal: a business that fails the 80/10/10 on eligibility can still be bought by swapping in a local senior lender and negotiating a much heavier seller note. Push that vendor takeback as high as a motivated seller will go, because every point they carry is a point of their own money absorbing the risk of whatever they have not shown you. Line up your financing before you fall for the numbers, and always demand the most recent full year plus a line-by-line on every add-back, because the year the seller leads with is rarely the year you are actually buying.

Want to see how I stress-test every deal against cost shocks, revenue dips, and hidden liabilities before I'd put a dollar at risk? I walk through the entire Bulletproof method in a free 28-minute masterclass.

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