WIREFRAME · non-functional design mockup · Search-Fund / ETA QoE Verification · static illustrative data (Project Tamarind)
Project Tamarind · Commercial HVAC & refrigeration · LOI signed 2026-05-18

Seller Adjusted-EBITDA Package

Reviewed by DiligenceWorks · pre-QoE triage (not a QoE replacement)
61cred.
Claim-credibility score. $1.14M of the ask unsupported.
$4,000,000
Asking price · 4.0× $1.0M adj. EBITDA
Seven adversarial checks
Add-Backs Reject
Owner draws $60K vs $150K market GM; $74K of "normalization" is real cost. +$18K spouse consulting.
−$92K EBITDA× 4.0 = −$368K price
Revenue Quality Flag
$55K wage-subsidy credit + $15K one-off ERP project + timing pull-forward — non-recurring.
−$70K EBITDA× 4.0 = −$280K price
Margin / Expense Flag
Owner-owned premises at $0 rent (market $48K); deferred R&M understates cost.
−$55K EBITDA× 4.0 = −$220K price
Cash Conversion Flag
$85K of $430K AR >90 days (20%); $20K under-reserved. EBITDA ≠ cash.
−$20K EBITDA× 4.0 = −$80K price
Working Capital Flag
Proposed peg $120K vs TTM-avg $310K; buyer re-funds the gap at close.
−$190K pricedollar-for-dollar
Concentration Reject
Top customer 38%, month-to-month, related party, expires Sep-26.
$285K at risk→ escrow / earnout
Owner Dependence Reject
Owner holds 3 of top-5 relationships + master licence; no GM; 60-day handover.
$2.1M rev. at risk→ earnout + TSA
Cards reveal in sequence during the demo. Green = pass · Amber = flag (negotiate) · Red = reject (structure / condition). EBITDA findings are multiplied by the 4.0× purchase multiple; working-capital is dollar-for-dollar; risk findings carry an at-risk figure. Each amount is traceable (see audit drawer).
Exception report
ItemCheckFindingClaimedSupportedDeltaSource
1Add-BacksOwner draws $60K; market GM $150K → $74K of "salary normalization" is under-accrued cost; +$18K related-party spouse consulting (recurring)$185,000$93,000$92,000comp benchmark · payroll
2Revenue Quality$55K pandemic wage-subsidy credit + $15K one-off ERP-implementation project + timing pull-forward — non-recurring$70,000$0$70,000GL · subsidy receipts
3Margin / ExpenseOwner-owned premises charged $0 rent (market $48K/yr) + deferred R&M understate operating cost$0$55,000$55,000lease comps · FA register
4Cash Conversion$85K of $430K AR aged >90 days (20%); $20K beyond reserve likely uncollectible — under-reserved bad debt$0$20,000$20,000AR aging
5Working CapitalProposed NWC peg $120K vs trailing-12-mo average $310K — buyer re-funds the gap at close$120,000$310,000$190,000†12-mo balance sheets
6ConcentrationTop customer 38% of revenue; month-to-month; related party; contract expires 2026-09-30——$285,000*sales ledger · contract
7Owner DependenceOwner personally holds 3 of top-5 customer relationships + the master refrigeration licence; no second-in-command; 60-day handover——$2.1M‡org chart · licences
EBITDA overstatement $237,000 → at 4.0× = $948,000 of price · + $190,000 working-capital true-up$1.14M*$285K EBITDA at risk · †WC dollar-for-dollar · ‡$2.1M rev. owner-dependent
Arithmetic (internal recompute, not a headline card): all schedules re-derived; a $4K subtotal overstatement in the seller's add-back schedule was corrected within the bridge. Table-stakes, not a QoE workstream.
Recommended position
Purchase multiple 4.0× — illustrative; adjust to re-run the EBITDA→price bridge (stub)
$2.86M
Support
$0.95M
Renegotiate
$0.19M
Restructure
Export QoE-prep memo (PDF) Send to data room / IC (stub) Accept / override flags
Audit drawer (on click): Source = comp benchmark — GM / Ops Manager market $150K vs the owner's $60K draw. The $90K "salary normalization" add-back is mostly an under-accrued operating cost the buyer inherits → disallow $74K; +$18K related-party spouse "consulting" is recurring → disallow. Net: cut add-backs by $92K (= −$368K of price at 4.0×). Concentration & owner key-person → escrow / earnout / TSA, not a price line.

Pipeline trend — this search

$6.4M
of inflated asking price flagged across 11 targets screened this search — the deals you didn't overpay for, or walked from in week one not week three
Bars = $ over-ask flagged per target · amber = above the walk-away threshold.
Mockup only — illustrative figures, no live engine. Final figures come from the seven-check engine per DESIGN-search-fund-qoe-verification.md.