TUESDAY | DEAL BREAKDOWN
TL;DR: Three SBA-financed businesses scored this week: a plumbing company at $395K, an electrical contractor at $1.8M, and a marketing and advertising business at $1.7M. The two trades clear their debt coverage tests with room to spare. The third posts a 69% margin, roughly triple its industry average, and still fails its stress test. Each deal links to its full scored breakdown.
Green means it cleared. Red means it did not. Click any deal for the full model.
🟩 Plumbing: $395,000
🟩 CLEARS: 4.64x DSCR
Asking Price | $395,000 |
Earnings (SDE) | $280,000 |
Revenue | $1.8M |
Multiple | 1.41x |
→ The DSCR clears at 4.64x. The entire business runs on one license. See what happens to that number on day one
The Setup. Plumbing is what people call when the water is already on the floor, and that is the whole investment case in one line. This one runs $1.8M in revenue at a 16% margin.
🟩 Electrical Contractor: $1.8M
🟩 CLEARS: 3.36x DSCR
Asking Price | $1.8M |
Earnings (SDE) | $917,000 |
Revenue | $2.4M |
Multiple | 1.96x |
→ It clears at 3.36x. A 38% margin in a trade that competes on price is either a real moat or one good year. See where the margin actually comes from
The Setup. An electrical contractor holding 38% against a 17% industry average has stopped competing on price, which usually means a book weighted toward service and repair rather than new construction bids. At 1.96x, below the 2.90x average for the trade, you are not paying up for that quality either. What I do not know yet is where the margin came from.
A deal that clears the bank and a deal worth your capital are not the same thing. The free masterclass covers the structuring that separates them.
🟥 Marketing / Advertising: $1.7M
🟥 FAILS STRESS TEST: 1.86x DSCR
Asking Price | $1.7M |
Earnings (SDE) | $482,376 |
Revenue | $703,779 |
Multiple | 3.52x |
→ A 69% margin, and a 20% revenue dip ends it. See exactly what breaks at 1.86x
The Setup. This is the best-looking business in the issue: a 21-year-old military advertising network, 4,000 recurring subscribers, more than 75% of them still there past a year, running almost without the owner. A 69% margin against a 22% industry average, and on paper the clear winner of the three. Then you finance it at $1.7M, and a 20% revenue drop is all it takes to stop covering the debt.
Two of these came back green and one came back red, and the red one is where I would spend my week. It is also the one most likely to talk a buyer into a bad structure, because a high margin feels like a safety margin right up until the revenue moves.
See you Thursday.
Mike
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