Home-services contractor · Buyer · Pre-LOI underwriting
The home-services contractor looked profitable. The buyer found costs the headline numbers left out.
Published · Reviewed by The Diligence Standard Team · Updated
A buyer considering the home-services contractor believed the opportunity could justify the next commitment. The starting point was $610K seller-reported SDE. Then one practical question changed the conversation: owner compensation adjustments exceeded a supportable replacement-cost view.
What was at stake
The buyer was not trying to win an argument. The question was whether the price, financing and responsibilities after closing still made sense if $136K difference in annual earnings base.
How the evidence changed the decision
The buyer needed the story and the records to agree. The review connected monthly P&L and general ledger, owner payroll and role map and add-back schedule with invoices, then traced the exceptions back to the operating claim instead of relying on another summary or screenshot.
The important moment was not a dramatic accusation. It was the point at which the records supported “$474K modeled recurring SDE” more clearly than “$610K seller-reported SDE.” The buyer could finally see what had changed and why it mattered.
Decision
The buyer could now decide whether to reprice the opportunity, change the terms, require additional proof or step away. The issue had a defined place in the decision instead of remaining a vague concern.
Evidence reviewed
- Monthly P&L and general ledger
- Owner payroll and role map
- Add-back schedule with invoices
- Customer revenue by month
The figures are constructed to demonstrate method. A live conclusion would depend on source records, replacement requirements, financing terms and transaction structure.