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Illustrative example — not a real listing

Example report

This is what a Deal Check looks like. The business, its figures and its claims are invented to show the format — no email needed to explore it.

Corner Coffee House · Coffee shop with catering · 8 years trading

Illustrative interior of a small coffee shop
Illustrative photo

Overview

The headline view, the figures and what to be careful about.

Initial assessment

Worth investigating, but the price rests on earnings nobody has documented yet.

The asking price looks reasonable for a café of this size if the seller’s earnings hold up. Right now they are a claim, not a fact: no tax returns, no add-back schedule and no catering contracts have been shared.

Asking price
$850,000
Annual revenue
$1,200,000
Seller earnings (SDE)
$250,000
Price ÷ seller earnings
3.4×

Key cautions

  • The price is 3.4× the seller’s claimed earnings — that only holds if the $250,000 is real.
  • About 30% of sales are said to come from catering, but no contracts or customer list have been provided.
  • The lease has not been shared, so it’s unknown whether it can transfer to a new owner.

Seller claims to investigate

What the seller says, and why it matters to you.

  • Seller earnings of $250,000 a year

    Needs evidence

    The whole price is built on this number. It likely includes add-backs that need line-by-line support.

  • Revenue of $1.2M, growing about 12% a year

    Needs evidence

    Growth claims are often based on a single strong year. Three years of figures show the real trend.

  • Catering is around 30% of sales

    Needs evidence

    If a few corporate clients make up most of this, losing one would hit earnings hard.

  • Owner works about 25 hours a week

    Ask the seller

    If the owner does the ordering, staffing and catering sales, you may need to pay someone to replace them.

  • Equipment recently upgraded

    Ask the seller

    Affects how much you might spend in the first year. Age and condition should be listed.

Missing evidence

Documents the listing doesn’t include yet.

  • Business tax returns for the last three years

  • A schedule showing each add-back behind the $250,000 earnings figure

  • Catering contracts or a list of catering customers with annual spend

  • The lease, including term, rent increases and assignment terms

Questions to ask the seller

Copy these into your next email or call.

  • Which add-backs make up the $250,000, and can each one be documented?

  • How much of last year’s revenue came from your three largest catering customers?

  • Are any catering arrangements written contracts, and can they transfer to a new owner?

  • What exactly do you do each week, and who would cover it after the sale?

  • When does the lease end, and has the landlord agreed in principle to an assignment?

  • What would you expect to spend on equipment in the next two years?

Next steps

In the order we’d do them.

  1. 1

    Ask for the tax returns and add-back schedule before discussing price.

  2. 2

    Request the catering customer list to see how concentrated those sales are.

  3. 3

    Get a copy of the lease and check the assignment clause early.

  4. 4

    Only once these are in hand, decide whether to make an offer — and at what price.

Ready to check your own deal?

The free Deal Check gives you an initial assessment from just the asking price and seller earnings.

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