GATE 01
Reconcile the numbers
Prove revenue and SDE from source documents, not a broker-entry field.
- Three years of tax returns and P&Ls
- Trailing-12-month monthly P&L
- SDE bridge with every add-back
- Bank-deposit tie-out by month
One number is doing two impossible jobs.
A Cook County plumbing and HVAC listing asks $1.4 million. Its advertised gross revenue and seller’s cash flow are both exactly $341,512. Before valuation, financing, or an LOI, that contradiction has to be resolved.
Preliminary verdict
HOLD. The price might be defensible. The evidence on the listing page is not.
Scope: public-listing screen only. No CIM, tax returns, P&Ls, bank statements, customer file, or management interview was available. This is triage—not a valuation, QoE, legal opinion, or investment recommendation.
The case file
What the listing says
The surface story is attractive: a 24-year-old essential-services company, diversified across plumbing and HVAC, with a five-person team and relatively little new construction exposure. But the financial headline breaks on first contact.
Asking price
$1.40M
Business only; leased premises
Listed SDE
$341,512
Advertised cash flow
Gross revenue
$341,512
Same number as SDE
Full-time staff
5
Payroll reportedly in-house
Business mix
60 / 40
Plumbing / HVAC
Customer mix
60 / 40
Residential / commercial
Included assets
$143K
FF&E + inventory
Lease expiry
85 days
From this screen date
Top line
$341,512
Gross revenue is the sales generated before operating expenses.
VERSUS
Owner benefit
$341,512
SDE begins with profit and adds back eligible owner, non-cash, and one-time items.
The catch
With five employees, rent, vehicles, materials, insurance, and ordinary overhead, the two figures cannot both describe the business accurately under the usual meaning of gross revenue and SDE. The most charitable explanation is a listing-entry error. It is not proof of misconduct—but it is a hard stop on underwriting.
The price test
A premium with no proof attached
Using the advertised SDE at face value, the asking price is 4.10× earnings. That is not automatically wrong—but public sold-business benchmarks put the burden of proof squarely on transferability, recurring revenue, management depth, and clean financials.
Ask ÷ advertised SDE
4.10×
$1,400,000 ÷ $341,512. This is arithmetic, not a valuation conclusion.
HVAC businesses, average sold earnings multiple2.75×
Plumbing businesses, average sold earnings multiple2.49×
This listing’s asking multiple4.10×
BizBuySell’s benchmark covers reported sales from 2021–2025. Broad averages are context, not a substitute for company-specific valuation.
$143K assets
$1.257M implied going-concern value
10.2% listed FF&E + inventory89.8% rests on cash flow, customers, people, systems, and reputation transferring
SDE scenario
Cash flow
Ask / SDE
What it means
Advertised figure survives verification
$341,512
4.10×
Premium still needs support
Moderate add-back haircut
$275,000
5.09×
Price stretches quickly
Owner role requires a hired operator
$240,000
5.83×
Economics may stop working
The two lower SDE figures are sensitivity cases, not claims about the company. Their purpose is to show how fragile the asking multiple becomes if advertised add-backs or owner labor do not survive diligence.
The real work
Three gates before an LOI
The objective is not to “catch” the seller. It is to turn uncertainty into a short sequence of pass/fail gates—cheap questions first, expensive diligence only after the basics hold.
GATE 02
Prove transferability
Show that customers, systems, and licenses stay with the buyer.
- Revenue by top 20 customers
- Maintenance-plan and repeat-service mix
- CRM, phone numbers, domain, reviews
- License holder and change-of-control plan
GATE 03
Price the owner’s job
SDE is not passive income. Identify the labor hidden inside it.
- Owner hours and weekly responsibilities
- Sales, estimating, dispatch, and field work
- Replacement manager compensation
- Transition period and non-compete terms
The first request should fit in one email.
Ask for a corrected listing sheet plus the minimum evidence needed to decide whether the opportunity deserves a CIM review and lender conversation.
Broker questions
Twelve questions that earn the next hour
Good triage does not ask for everything. It asks for the few facts that can kill or strengthen the deal fastest.
01Which figure is incorrect: gross revenue or SDE? Please send the corrected listing sheet.
02What period does the $341,512 SDE cover: calendar year, fiscal year, or trailing twelve months?
03Please provide the monthly P&L for the trailing 36 months.
04Please provide business tax returns for the last three completed years.
05What are the specific SDE add-backs, by amount, and which are recurring?
06How many hours does the owner work, and what functions would a buyer need to replace?
07What share of revenue comes from maintenance agreements or repeat customers?
08What percentage of revenue comes from the largest 1, 5, and 10 customers?
09Who holds the required trade licenses, and do they remain after closing?
10Which vehicles, tools, software accounts, phone numbers, and domains are included?
11Has the landlord agreed to assignment or renewal beyond December 31, 2026? On what terms?
12What explains the premium over typical sold-business earnings multiples?
Hold
Not a “no.” A disciplined “not yet.”
The listing contains enough operational promise to justify one tightly scoped request—not enough evidence to justify an LOI. Resolve the duplicate financial figure, verify SDE, secure the facility path, and price the owner’s labor. Only then is a valuation conversation meaningful.
Advance if
Corrected revenue supports the stated SDE; add-backs tie to source documents; customer concentration is manageable; the lease can be renewed or assigned; and the owner’s duties are replaceable within the model.
Pass if
The basic figures remain unreconciled, source documents do not arrive, key relationships or licenses cannot transfer, or normalized SDE makes the asking price economically implausible.
Sources & method
- BizBuySell listing: Long Term Plumbing & HVAC Serving Cook County — asking price, SDE, gross revenue, employee count, mix, assets, rent, and lease data; reviewed October 7, 2026.
- BizBuySell valuation benchmarks: electrical & mechanical contractors — reported HVAC and plumbing sold-business benchmarks for 2021–2025.
- Morgan & Westfield: Seller’s Discretionary Earnings — definition and common SDE adjustments.
Calculations are LOI Lens arithmetic from the cited listing: $1.4M ÷ $341,512 = 4.10×; $125K FF&E + $18K inventory = $143K; $1.4M − $143K = $1.257M. “Implied going-concern value” is a triage label, not an accounting purchase-price allocation. Listing details can change or be corrected after publication.