This Business Valuation Report has been prepared by Business Sale & Acquisition Sample on behalf of Desert Sun HVAC Services LLC for the purpose of facilitating a potential sale transaction. This report represents a broker's opinion of value and does not constitute a certified business appraisal as defined by the American Institute of Certified Public Accountants (AICPA) or the American Society of Appraisers (ASA).
The valuation conclusions expressed herein are based on financial information provided by the business owner, publicly available industry data, and comparable transaction data from recognized M&A databases. The Advisor has not independently audited, verified, or reviewed the underlying financial statements, tax returns, or other source documents referenced herein.
The reader is cautioned that actual transaction values may differ materially from the ranges presented in this report due to market conditions, buyer/seller negotiations, due diligence findings, financing availability, and other factors outside the control of the Advisor.
Seller's Discretionary Earnings (SDE) represents the total financial benefit a working owner derives from the business, normalizing for non-recurring and discretionary items to reveal the true earning power of the enterprise.
| Item | FY2021 | FY2022 | FY2023 |
|---|---|---|---|
| Net Income (Tax Return Basis) | $426,000 | $528,000 | $636,000 |
| Add: Owner's Salary & Benefits | $154,000 | $206,000 | $256,000 |
| Add: Depreciation & Amortization | $118,000 | $134,000 | $148,000 |
| Add: Interest Expense | $42,000 | $38,000 | $31,000 |
| Add: Owner Personal Vehicle (Non-Business) | $18,400 | $19,200 | $22,000 |
| Add: Owner Cell & Personal Travel | $8,200 | $9,400 | $11,400 |
| Add: One-Time Equipment Repair (Non-Recurring) | $0 | $0 | $28,600 |
| Less: Market-Rate Manager Replacement | ($62,000) | ($68,000) | ($72,000) |
| Less: Estimated Capex Replacement Reserve | ($208,600) | ($47,600) | ($113,000) |
| Adjusted SDE | $896,000 | $1,019,000 | $1,148,000 |
The valuation is presented in three scenarios based on multiple ranges observed in comparable HVAC business transactions in the Southwest US market (2022–2025 closed transactions, BizBuySell, PriceData, IBBA database).
The following financing structure illustrates the cash-on-cash return profile for a qualified buyer using SBA 7(a) financing at market rates. Desert Sun's debt service coverage ratio of 2.25× comfortably exceeds the SBA minimum threshold of 1.25×.
| SBA Financing Detail | Amount |
|---|---|
| Recommended List Price | $3,675,000 |
| SBA Buyer Down Payment (20%) | $735,000 |
| SBA Loan Amount (80%) | $2,940,000 |
| Estimated SBA Rate | 10.5% (Prime + 2.75%) |
| Loan Term | 10 Years |
| Estimated Monthly Debt Service | $38,900/mo |
| Estimated Annual Debt Service | $466,800/yr |
| Weighted SDE (Earnings Available for Debt) | $1,050,000/yr |
| Debt Service Coverage Ratio (DSCR) | 2.25× |
| Annual Cash Flow After Debt Service | $583,200/yr ($48,600/mo) |
| Cash-on-Cash Return on Down Payment | 79.3% |
| Value Driver | Rating | Commentary |
|---|---|---|
| Revenue Growth Trajectory | 3-year CAGR of 10.0%; no single year of decline | |
| Recurring Revenue Base | 340+ annual maintenance contracts; 25% of revenue | |
| Customer Concentration | Top 10 clients = 18% of revenue; acceptable concentration | |
| Owner Dependency | Owner handles business development; field ops independent | |
| Staff Quality & Retention | NATE-certified team; avg tenure 8.4 years | |
| Competitive Position | Top-10 HVAC contractor in service territory by revenue | |
| Facility & Equipment | Month-to-month lease; equipment in good condition | |
| Financial Documentation | Clean 3-year P&L; tax returns available |