THE SHORT ANSWER
Define the earnings basis and what the quoted value includes, then reconcile the offer to cash at closing and later contingent or deferred amounts. Review vehicles, equipment, stock, receivables, customer deposits, debt and fees under the proposed agreement. A headline multiple or service-plan premium does not tell a plumbing or HVAC owner how much cash they will receive.
Ask what the quoted value represents
Identify the earnings measure, period and supported adjustments behind each proposal. Use the plumbing earnings guide or the HVAC benchmark guide for the actual business rather than a single 3.5–5.5x range across all operations.
Clarify asset versus ownership purchase, debt treatment and whether quoted value includes operating fleet, equipment, stock and working capital. Distinguish separate property from business assets. A service-agreement book’s contribution to earnings does not mean it should also be added as a separate price.
SBA sale guidance addresses assets, liabilities and the written agreement.
(SBA: closing or selling a business)Use the agreement to establish scope rather than assuming every offer uses the same delivery definition.
Build the specified closing-cash bridge
| Invented offer cash bridge | Amount |
|---|---|
| Specified cash price payable at closing | $1,000,000 |
| Specified debt payoff from these proceeds | −$100,000 |
| Assumed seller transaction fees | −$50,000 |
| Specified downward closing adjustment | −$20,000 |
| Cash remaining before tax and other items | $830,000 |
Avoid deducting a debt payoff twice if the quoted payment is already net of that debt. Review delivery adjustments with the working-capital worksheet. List escrows, deferred amounts and contingencies separately from unrestricted closing cash.
Review included work and assets consistently
Identify prepaid maintenance, open installation jobs, refunds, warranties, unpaid invoices and withheld customer payments. Have advisors reconcile accounting and responsibility for completion. More cash collected before closing can come with more work still owed.
Define vehicle and equipment title, liens, leases and condition; distinguish technician-owned tools and personal assets. No generic 50–70% replacement-cost equipment value, standard fleet age or automatic technology premium establishes actual proceeds.
Use the HVAC preparation register and the plumbing handoff guide to connect proposed operating coverage with achieved evidence. A future manager, route improvement or plan conversion must not be priced as if already implemented without support.
Compare certainty, timing and unresolved terms
SEC guidance concerns adjusted measures in issuer reporting.
(SEC: non-GAAP financial measure interpretations)Use it as a presentation reference with accountant review of supported earnings. Reject blanket personal vehicle payments, capital purchases and owner draws as automatic deducted expenses to add back.
SBA acquisition guidance addresses the full investment and operating-cost review.
(SBA: evaluating an existing business purchase)Discuss buyer funding and conditions separately from headline price. Review later-payment terms, controls, contingencies, warranties and obligations with counsel and the lender where relevant. Use the offer-comparison tool for disclosed assumptions and the transaction-structure guide with tax advisors for actual net proceeds.
No fixed technician/renewal/margin target, automatic management premium, guaranteed retained clients or certified calculator result is established.
Owner questions
Is headline business value my cash at closing?
Reconcile price scope, debt, fees, adjustments and deferred or restricted terms.
Should a debt payoff be deducted from every quoted offer?
Check whether it is already netted or otherwise treated in that proposal; avoid duplicate deductions.
Does the $830,000 example estimate my taxes?
No. It is invented pre-tax arithmetic under only the specified offer assumptions.
Sources and review scope
Source review completed . The sources below support the identified concepts or rules; they do not validate hypothetical amounts or a valuation of your business.
- SBA: closing or selling a business
Valuation approaches, sale agreements, assets and ownership transfer.
- SEC: non-GAAP financial measure interpretations
Staff interpretations last updated December 2022: recurring operating costs and distinguishing EBITDA from adjusted measures. SEC reporting context, not a universal private-sale rule or automatic acceptance of add-backs.
- SBA: evaluating an existing business purchase
Current consolidated planning page, acquisition sections: investment and operating costs, personal fit, infrastructure, investigation and professional document review. Not proof of off-market availability, superior pricing or financing approval. No franchise-specific conclusions taken from this source.
Confirm tax, legal, accounting and lending applications with the relevant professionals. Historical market observations describe the stated period and reported sample.
This is educational material. Industry figures and program rules can change; check the original sources and your advisors before applying them to a transaction. Calculator scenarios are not appraisals, lending decisions, or offers.
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