Vendor sheet · SBA 7(a) acquisitions
Independent buyer-side quality of earnings
Financial Modeling .net · Sergei Mochtchenkov, CFA
sergei@financialmodeling.net
financialmodeling.net/lenders
- Engaged by
- The buyer, never the seller
- Fee
- Fixed, from $6,000 buy-side
- Timeline
- 2–3 weeks after NDA and complete data
- Proposal
- Fixed scope within 24 hours
Scope
Cash Proof. Bank deposits and disbursements reconciled to reported revenue, earnings and filed tax returns, period by period, with unreconciled differences listed.
EBITDA bridge. Reported to adjusted EBITDA, each add-back marked supported, unsupported or open, with the evidence referenced.
Revenue quality. Customer concentration, recurring versus one-off revenue, churn and pricing changes across the review period.
Working capital. Normalized net working capital, seasonality and items that should affect the peg or closing adjustments.
Debt-like items. Deferred revenue, accrued liabilities, related-party balances and deferred maintenance flagged for structuring.
Open issues. A short list of findings that change price, DSCR or conditions, written for the credit memo rather than for the buyer alone.
How it runs
- 01 Lender call: Before fieldwork, I confirm your provider, scope, Cash Proof format and reliance or secondary-review requirements.
- 02 Engagement: The buyer engages me. The letter names you as a permitted user, sets the reliance terms and fixes fee and dates.
- 03 Fieldwork: Ledger, bank and tax-return reconciliation, add-back testing and management questions. You get early notice of material issues.
- 04 Signed report: Signed findings memo with schedules, delivered to the buyer and to you, followed by a call with your underwriter if wanted.
Independence
- — No equity, success fee or contingency in any deal I review.
- — No engagement by, or work for, the seller on the same transaction.
- — Fee fixed before fieldwork; it does not move with the findings.
- — Conflicts confirmed in writing in the engagement letter.
SBA context
Effective October 1, 2026, SBA 7(a) initial acquisitions and business expansions with a business purchase price of $3,000,000 or more require a quality of earnings report in addition to a business valuation. The updated SOP applies to applications received by SBA on or after that date.