Northstar fictional acquisition document packet
Every company, message, number and document below is fabricated for instruction. No real broker communication has been sent. Monetary figures are actual USD. Documents are dated relative to a hypothetical project Day 0, not evidence of an actual sale or commitment.
Document 1 — acquisition criteria
The sponsor seeks a local commercial-services operator with repeat demand, transferable customer relationships, $400,000–$800,000 normalized managed EBITDA, and an organization that can operate without the founder after a documented transition. Maximum cash equity available is $550,000, separate from personal living reserves. Minimum business cash is $150,000. The sponsor will not approve a deal dependent on unverified credentials or one customer renewal. Personal guarantees require a separate risk decision.
Document 2 — broker teaser
Northstar Commercial Door Services sells installation, inspection and maintenance for commercial access systems. Revenue is $3 million; the seller seeks $2.4 million operating EV, including normal operating NWC and excluding cash, financing debt and real estate. The teaser advertises $800,000 adjusted owner earnings. Recurring relationships are described as “sticky,” without a supplied cohort analysis.
The teaser is a seller assertion. It does not establish market value, transferable credentials or a lender commitment. The buyer must inspect the earnings definition rather than multiply the advertised amount by an industry rule.
Document 3 — condensed fictional CIM
The founder oversees quoting, a required technical credential, and the largest customer. The shop operates from an affiliate-owned facility. The founder proposes retiring after a short handover. A service manager could replace routine management, but the credential-transfer and customer-consent questions are not yet resolved.
One property-management customer provides 35% of sales. Its contract requires consent to assignment in the proposed asset purchase. The largest receivable is from that customer. Technician turnover and callback data are not supplied. The installation pipeline contains unaccepted quotations as well as signed work; it is not all backlog.
Document 4 — source financial summary
| Reported annual line | Amount |
|---|---|
| Revenue | $3,000,000 |
| Operating costs before DA, including owner costs | ($2,500,000) |
| Reported EBITDA | $500,000 |
| D&A | ($50,000) |
| EBIT | $450,000 |
Owner compensation is $180,000 within costs; supported replacement management is $120,000 fully burdened for the base exercise. Personal expenses of $20,000 disappear. The seller requests all $100,000 repairs as an add-back; records support only $40,000 exceptional excess, retaining $60,000 normal maintenance. Market rent is $20,000 above historical related-party rent. No additional adjustments are accepted. Required licensing beyond routine management remains a gate rather than a free assumption.
Document 5 — operating balance sheet
| Opening source balance | Amount |
|---|---|
| Cash | $150,000 |
| Receivables | $420,000 |
| Inventory | $100,000 |
| Prepayments | $20,000 |
| Net PP&E | $400,000 |
| Total assets | $1,090,000 |
| Trade payables | $170,000 |
| Operating accruals | $70,000 |
| Financial debt | $200,000 |
| Equity | $650,000 |
| Liabilities plus equity | $1,090,000 |
This is historical source information, not the buyer's purchase-accounting opening balance sheet. Historical financing debt and cash are excluded from the proposed operating purchase. Normal operating NWC is $300,000. Estimated delivery is only $280,000; contract treatment reduces consideration dollar for dollar and the buyer must restore the shortage.
Document 6 — fictional broker email
“Owner earnings are $800,000 after adding back compensation, personal spending and the full repair bill. We suggest an earnout if the buyer worries about customer retention. Seller will help for as long as necessary.”
The buyer should respond through the authorized process requesting payroll, replacement scope, repair support, customer contract and credential review. It should not accept the earnout as compatible with an SBA Initial Acquisition or assume indefinite seller management is permitted.
Document 7 — diligence request and issue list
Request monthly ledger and bank reconciliations; tax returns and transcript review through the lender's process; AR aging and subsequent receipts; customer-level revenue and contribution; written contract assignment terms; inventory count and ownership; equipment condition; payroll and technician credentials; insurance and inspection claims; lease terms; tax and litigation information; and software/data transfer rights.
Assign the customer consent to commercial/legal diligence, credential continuity to operational/legal review, earnings reconciliation to finance, injection and note treatment to the lender, and liability allocation to counsel. Each issue needs a named role, evidence, deadline and proceed/revise/decline consequence. An unanswered request is not a verified fact.
Document 8 — concentration analysis inputs
Largest customer revenue is $1,050,000. Contribution margin is 45%; annual avoidable account-specific overhead is $72,500. The rest of the fixed organization remains after a loss. Assume no immediate cash tax refund in the downside. A customer letter expressing interest is not the required signed consent.
Document 9 — preliminary valuation inputs
Use a fictional judgmental 3.5x–4.25x normalized managed EBITDA range, not sourced industry transactions. Reconcile that range with the earnings bridge and a DCF if developed. The seller's $2.4 million ask is operating EV, not seller equity proceeds including historical cash.
Document 10 — hypothetical financing proposal
Senior loan $2 million, 120 monthly amortizing payments, nominal annual rate 10% held flat for the base scenario. Seller fixed note $200,000, zero interest, full standby while the senior obligation remains outstanding under approved terms. No seller rollover, earnout, hidden bonus or interim sponsor distributions are assumed. Guaranty 75%; apply the same stated FY2027 large-loan fee tiers as Course 3. The proposal is not approved or committed.
Legal costs $60,000, diligence/valuation $25,000, other itemized costs $11,250, plus the calculated upfront guaranty fee. Opening buyer operating cash $150,000. Restore the estimated $20,000 NWC shortfall separately. For prospective cash planning, D&A is $50,000, maintenance CapEx $60,000, additional annual NWC investment $20,000, and taxes 25% of positive EBIT less cash interest. These are fictional modeling conventions, not tax advice.
Document 11 — commercial LOI outline
Propose $2.4 million operating EV subject to defined NWC, diligence and financing. Estimated shortfall reduces initial consideration. Use specified assets and liabilities, customer and credential gates, genuine transition obligations, reviewed full-standby seller note, and an illustrative 45-day exclusivity with evidence milestones. Counsel identifies selected binding provisions, governing law, remedies and termination.
The outline is not an execution-ready contract. Any escrow, recourse, covenant and allocation require supported terms and lender/counsel review. If verified earnings fall or material consents fail, revise or decline rather than keep the headline number through disguised consideration.
Document 12 — closing coordination checklist
Before a closing recommendation, obtain accepted valuation and QoE if applicable; approved lender commitment and source-of-equity evidence; seller/customer/credential consents; final asset and liability schedules; note and standby documents; insurance and guarantees; agreed NWC policies and estimate; approved funds flow and verified wire instructions; lease and software assignments; payroll and service-continuity readiness. Record each as verified, conditional or unresolved.
No fictional document in this packet establishes that these gates have been met. The pilot may therefore conclude with a conditional decision rather than a completed acquisition.
Document 13 — first-100-days plan
Days 1–10 prioritize cash authority, payroll, customer communications agreed with the seller, credential coverage, service dispatch, insurance and collections. Days 11–30 establish weekly cash forecasting, aging review, callback monitoring and customer-retention calls. Days 31–60 validate technician capacity and pricing by job, formalize handover and implement only funded improvements. Days 61–100 compare actual margins, retention, investment and coverage with underwriting and revise the operating plan.
The operating dashboard includes cash above the $150,000 floor, overdue AR, customer retention, service response, callbacks, technician capacity and covenant headroom. Escalate a missed customer consent or credential gap before performing regulated work; do not treat a future legal claim as an operating license.
Document 14 — forward DCF assumptions
Apply a distinct forward valuation forecast to the same normalized business: opening revenue $3 million, EBITDA margin 20%, five years of revenue growth 3%, D&A at revenue/60, CapEx 2% of revenue, NWC 10% of revenue with opening NWC 300,000, unlevered operating tax 25%, discount rate 20%, terminal revenue growth 2%. Build a separate sixth cash-flow year and keep all operating ratios constant there. Units are actual USD. This forecast differs intentionally from the conservative historical-run-rate debt test: forward growth cannot substitute for required historical repayment evidence. No surplus cash or acquired historical financial debt is added to this operating value.