Underwrite a Deal
The Target
Verdict
Nothing has been submitted yet, so this reads the example in the form above: a $1,500,000 ask on $500,000 of earnings. Change the figures and the verdict follows them.
- WatchAsking 3.0x against a 1.37x to 2.48x band
Above the cited range for this industry. Either the business is genuinely better than its peers and you can show why, or the ask is soft.
- WatchOwnership or licensing is restricted here
No practitioner license gates the trade, and where a permit exists it is a per location sales permit that may not be gated behind an exam.
- GoodDSCR after your salary is 2.29
Above the 1.25 rule of thumb.
The Number That Should Set Your Offer
At $500,000 of SDE, a $100,000 owner salary, $200,000 of cash, and a 10% seller note, the most this business can carry at a 1.25 DSCR is $2,561,235. The ask sits $1,061,235 under it.
Structure
- Equity (your cash)
- $200,000
- Seller note
- $150,000
- 7(a) loan
- $1,150,000
- Annual debt service
- $174,813
- DSCR
- 2.29
- Implied multiple
- 3.00x
- Cited band
- 1.37x–2.48x SDE
Context
- Deals financed (FY2020 through FY2025)
- 139
- Industry median loan
- $216,000
- Industry charge-off
- not measurable
- State median loan
- –
- State FY2025 loans
- –
The median is a loan, not a price: equity and seller notes sit on top. Charge-off rates come from the seasoned cohort only; FY2020+ loans are too young to have defaulted. Rates are a lower bound (open loans can still fail), so read the ordering, not the level.
Licensing: Price free entry as a competitive fact: the defensible assets are standing orders and referral relationships, never the permit.