Good Opportunity
Strong DSCR, fast payback, and a proven lead engine. But the income statement has some head-scratching entries that need answers before you wire a deposit. Score reflects genuine potential — with a homework assignment attached.
The Pitch
A well-established painting company in Casselberry, FL (just north of Orlando) has been operating for 11 years. It does $3.3M in annual revenue, claims $450K+ in seller's discretionary earnings, has a fleet of repeat clients, a dominant local reputation built on five-star reviews, and — conveniently — 228 qualified estimates flowing in during a single recent 30-day stretch.
The listing also promises an experienced office manager, a dedicated estimator, and project coordination infrastructure that "significantly reduces owner involvement." Turnkey. Scalable. Ready to go.
Great. Except when you look at the actual income statement, a couple of things stick out like a fresh coat of neon yellow on a Victorian home.
| Line Item | Amount |
|---|---|
| Net Revenue | $3,300,000 |
| Total COGS | $0 |
| Gross Profit | $3,300,000 (100.0%) |
| Total Operating Expenses | $0 |
| EBITDA | $500,000 (15.2%) |
| Net Income | $2,475,000 (75.0%) |
| SDE (Seller's Discretionary Earnings) | $500,000 |
A painting business with $0 in COGS and $0 in operating expenses isn't running lean — it's missing data. The 100% gross margin and 75% net margin are not industry-defying efficiency; they're incomplete inputs. The seller likely didn't populate those fields in the listing, and OwnABiz's model is showing you exactly why that matters. The SDE figure of $500K is plausible and probably real. The rest of the income statement needs documentation before you proceed.
What the Numbers Actually Say
Let's separate the noise from the signal here. A painting business doing $3.3M in revenue generating $500K in SDE is a 15.2% SDE margin — that's actually normal and healthy for a well-run home services operator. Damodaran's 2026 dataset puts home services net margins around 12.1%, so the underlying profitability story is believable.
The AI flagged the 100% gross margin and 75% net margin as "implausibly high" and "mathematically impossible for a service business." That's correct. But this is almost certainly a data entry issue on the listing side, not evidence of fraud. The seller didn't break out labor costs, paint materials, or overhead in the fields the analyzer uses. What you actually need to request from the broker is three years of P&L statements showing fully loaded cost of goods — subcontractor pay, materials, insurance, vehicle costs — and compare that against the SDE figure they're claiming.
The $500K SDE is your anchor. Everything else in this analysis flows from that number. If it holds up under a proper QoE review, the deal gets a lot more interesting.
The asking price of $1,595,500 sits at the top of the SDE multiple range for service businesses — 3.19× versus an industry median of roughly 2.59×. That's not a deal. It's a premium price on a strong asset. Whether you pay it depends on whether you believe the operating leverage story: subcontractor crews, existing estimator, established office manager. If the owner really is semi-absentee, a premium multiple is easier to justify. If the "turnkey" language turns out to mean "the owner is the rainmaker," you want to renegotiate toward 2.5× SDE before signing.
The revenue multiple lands at 0.48×, below the industry range of 0.63×–1.10×. That's actually favorable from a revenue standpoint — you're not overpaying relative to top line. Combine that with the EBITDA multiple sitting comfortably inside the 2.5×–4.0× range, and the math isn't outrageous. It's just not cheap.
"The DSCR is 2.09×. The lender minimum is 1.25×. There's a lot of breathing room between those two numbers — and that's exactly where good deals live."
The Financing Math Is Genuinely Good
This is where the deal earns its 7.8 score. With a 10% down payment of $164,550, you're looking at a monthly loan payment of $19,983 — leaving you with $260,202 in annual owner cash flow after debt service. That's a 158.1% cash-on-cash ROI on your down payment in year one, with a payback period of just 0.63 years.
The DSCR of 2.09× is the number that matters most to your lender. The SBA wants to see 1.25× minimum. This deal clears that bar by 67%. That means you have meaningful protection against a revenue dip — the business could lose roughly a third of its SDE before you'd start sweating debt service. For a service business in a growing market, that buffer matters.
Exceptional DSCR (2.09×)
Significantly exceeds the SBA 1.25× minimum. The loan will get approved. Your cushion against a slow quarter is real.
158% Cash-on-Cash ROI
Sub-8-month payback on a $164K down payment is strong. Very few acquisition targets at this price point deliver this.
Healthy EBITDA Margin (15.2%)
Within the 12–25% industry benchmark for service businesses. The underlying profitability story holds up.
Proven Lead Engine
228 qualified estimates in 30 days from a mix of organic and paid sources. That's a pipeline, not luck.
Incomplete Income Statement
$0 COGS and $0 OpEx aren't features — they're missing data. Demand fully loaded P&Ls for the last 3 years before you go further.
Owner Dependency Risk
Seven employees and an "owner-operator" structure means the relationships, reputation, and referrals may still orbit around the seller. Scrutinize the transition plan hard.
Premium Multiple on SDE
At 3.19× SDE, you're paying above the industry median. That's fine if the turnkey claim holds. If it doesn't, negotiate toward 2.75× before close.
Subcontractor Concentration
Crew structure built on subs can shift fast. Verify crew retention post-acquisition. Good subs who know the current owner may not stick around for a new one.
| Metric | This Deal | Industry Range | OwnABiz Flag |
|---|---|---|---|
| Gross Profit Margin | 100.0% | 30–60% | Data Error |
| EBITDA Margin | 15.2% | 12–25% | In Range |
| Net Margin | 75.0% | 8–18% | Data Error |
| Revenue Multiple | 0.48× | 0.63×–1.10× | Good Deal |
| Cash Flow Multiple | 3.19× | 1.75×–3.13× | Premium |
| SBA Default Rate (Sector) | 3.2% | — | Lower Risk |
| Local Market (Seminole Co.) | +8.9% estab. | 1,118 → 1,217 | Growing |
Worth Pursuing. Not Without Homework.
The cash flow numbers on this deal are legitimately strong. A 2.09× DSCR, a sub-8-month payback, and nearly $200K in estimated annual take-home after taxes and debt service — that's a real livelihood, not a lifestyle business side hustle. The Orlando market is growing, the lead machine is producing, and 11 years of five-star reviews don't happen by accident.
But here's the thing: any deal that shows $0 in COGS on $3.3M of revenue needs documentation before it gets your LOI. The AI score of 7.8 reflects what this deal could be with clean financials, not what the listing proves today. Request the tax returns. Request the P&Ls. Ask the broker to explain how the subcontractor crews are paid, where the paint and materials costs live, and what the gross margin actually looks like when fully loaded.
If those numbers come back in the ballpark of 40–50% gross margin — normal for a subcontractor-heavy painting operation — and the SDE of $500K survives a basic quality-of-earnings review, this deal warrants serious pursuit. The financing math works at this price. You'd just want to push for a seller note or earnout tied to revenue retention in year one, given the owner-dependency question marks. That's not pessimism — that's standard operating procedure for a business built on someone else's reputation.
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