Access / Deal 1435: illustrative underwriting exercise

Your brief

You are reviewing Access / Deal 1435, a real project under consideration in building-access, intercom and mailbox installation and service. This exercise uses an illustrative owner-transition scenario, an assumed asking price of 4,680,000, and a proposed financing structure. These are teaching assumptions, not actual deal terms or diligence findings.

Your job: decide whether to bid, at what price and on what structure, then write what you found. Take about 12 minutes. Read fast, mark what worries you, then run the model.

Does the illustrative case pass the first screen?

Against the screening example from Dubbs's 2022 video (revenue $1M to $10M, EBITDA margin 15% or more, fragmented customer base, steady cash flow):

Illustrative three-year history

Year 0 is the last 12 months. Revenue per customer is revenue divided by customers at year end. Churn is customers lost divided by customers at the start of the year.

Owner compensation is assumed to be replaced by a manager at the same cost, so there is no add-back.

Illustrative deal assumptions

• Asking price: 4,680,000, which is 6.0 times Year 0 EBITDA of 780,000.
• Proposed financing: a senior term loan, a seller note and equity (details below).

Senior loan: 9.0% interest, paid down evenly over 10 years. Seller note: 6.0% interest, two-year standby with interest added to the note, then interest paid in cash, principal paid at the sale. Senior debt is 3.08 times Year 0 EBITDA. Total debt is 3.85 times.

The five documents

Open a document, then select any sentence or table line that worries you. Select it again to remove the navy pen mark. Marks are saved in this browser and included with your work.

Illustrative document 1: Owner's note

Illustrative owner note for Access / Deal 1435. I started this company 22 years ago with two trucks. Today we run 14 technicians and a small office, and I am ready to step back. The work is steady: most customers sign yearly building-access service agreements and call us for repairs in between. Our average customer pays about 32,000 a year, and no single account dominates. Our oldest and biggest account is a property management group that has been with us for 19 years. I handle that relationship myself, and the renewal paperwork is a formality. The office is where we lose time. Our office manager spends about two days a week chasing late payments and retyping technician tickets into our old billing software. I think the price is fair for a business that has grown every year. I am happy to stay on for a handover.

Illustrative document 2: Customer list summary (Year 0)

Tier	Customers	Year 0 revenue	Average per customer
Largest customer	1	1,040,000	1,040,000
Customers ranked 2 to 5	4	520,000	130,000
Customers ranked 6 to 20	15	510,000	34,000
Customers ranked 21 to 130	110	2,090,000	19,000
Total	130	4,160,000	32,000

Ranks 2 to 5, one by one: 180,000; 140,000; 110,000; 90,000.

Revenue from the largest customer: Year -2 760,000; Year -1 900,000; Year 0 1,040,000.

Revenue by type, Year 0: building-access service agreements 2,704,000; repairs and call-outs 1,456,000; total 4,160,000.

Largest customer's agreement: three-year term, ending 14 months after the expected closing date. Renewal terms not yet agreed.

Illustrative document 3: Technician schedule (illustrative week)

Crew	Technicians	Scheduled hours	Billable hours	Utilization
Building-access and intercom service	5	200	150	75.0%
Intercom and entry-system repair	6	240	168	70.0%
Mailbox and access-system installation	3	120	96	80.0%
Total	14	560	414	73.9%

Each technician is scheduled for 40 hours a week. Utilization is billable hours divided by scheduled hours. The service manager (11 years with the company) builds the schedule each Friday in a shared spreadsheet. The office manager has 9 years with the company.

Illustrative document 4: Invoice aging (end of Year 0)

Age of invoice	Invoices	Amount	Share of total
0 to 30 days	96	400,000	50.0%
31 to 60 days	48	200,000	25.0%
61 to 90 days	30	120,000	15.0%
Over 90 days	22	80,000	10.0%
Total	196	800,000	100.0%

Receivables of 800,000 against Year 0 revenue of 4,160,000 equal about 70 days of sales (800,000 / 4,160,000 * 365). Process today: technicians write tickets on tablets, the office retypes them into the billing software, invoices are emailed in a batch on Fridays, and reminders are phone calls made when the office manager has time.

Illustrative document 5: Seller's deal summary

Asking price 4,680,000 (6.0 times Year 0 EBITDA of 780,000). Proposed sources and uses as in the deal table. Debt payments start at closing. For this scenario, assume the seller would sign a transition agreement. The seller states that growth in each of the last three years shows the business is stable.

Your tasks

1. Read and mark (about 4 min). Skim the five documents. Use the navy pen on anything that bothers you.
2. Run the base case (about 2 min). The model is already loaded with the case. Read the five-year result. Does the proposed deal hold up?
3. Stress it (about 4 min). Flex at least two inputs of your choice. Note which ones move your answer most.
4. Pick a bid (about 2 min). Choose a price in dollars and say whether you would change the structure. The page shows what your bid does to equity invested, MOIC, IRR and the lowest DSCR.

Then continue to the submission.