This $975k Construction / Contractor Pays $147,998/Year After Debt

The numbers are mixed. Coverage falls short of the 2.0x Bulletproof threshold.

This is a construction / contractor business listed at $975,000, generating $945,208 in annual revenue and $296,917 in seller's discretionary earnings. At a 3.28x cash flow multiple, the asking price is above the 3.00x Bulletproof threshold and near the 3.40x benchmark for construction / contractor businesses. The profit margin is 31%, well above the 12% benchmark for construction / contractor businesses, about 2.6x the category figure.

We ran this deal through the DealScore Pro Bulletproof Calculator to see how it holds up across all five scoring criteria. Here is the full breakdown.

Deal Snapshot

Key Metrics
Industry
Construction / Contractor
Asking Price
$975,000
Revenue
$945,208
Cash Flow (SDE)
$296,917
Cash Flow Multiple
3.28x
Industry avg: 3.40x
Profit Margin
31%
Industry avg: 12%

The deal snapshot tells a mixed story. Revenue of $945,208 produces a 31% margin, well above the 12% benchmark for construction / contractor businesses, about 2.6x the category figure. The 3.28x multiple is above the 3.00x Bulletproof threshold and near the 3.40x benchmark for construction / contractor businesses.

Financing Overview

Using the standard 80/10/10 SBA deal structure (80% SBA 7(a) loan, 10% seller financing, 10% buyer down payment), here is what this acquisition looks like when financed.

SBA Financing Breakdown
Total Acquisition Cost
$1M
Purchase price plus SBA guaranty fee and closing costs. The three financing slices below are shares of the purchase price only.
Down Payment
$97,500
SBA Loan
$780,000
10-year term, ~10.5% rate
Seller Note
$97,500
Typically 2-year standby, then 5-year amort
Cash Required at Closing
$126,750
Down payment plus $29,250 closing costs plus $122,877 working capital reserve
Annual Debt Service
$148,919
Post-Debt Cash FlowBefore replacing the owner’s role
$147,998 / year
DSCR
1.99x
Bulletproof minimum: 2.0x
Stress Test (20% Revenue Drop)
Passes
Still covers debt at $756,166 revenue

Why the Numbers Matter

The headline number most buyers fixate on is the asking price. But the asking price alone tells you almost nothing about whether a deal is worth doing. What matters is what happens after you finance it.

The post-debt cash flow of $147,998 per year is what is left after every loan payment on the figures entered. On a $97,500 cash investment, that is a strong return, and it is well above the $100K minimum threshold that the Bulletproof standard requires. This figure is calculated before any cost of replacing the owner’s own role in the business. Where the seller is also the person producing the revenue, a buyer should subtract what it would cost to hire that role before treating this as take-home pay.

The DSCR of 1.99x means the business generates $1.99 for every $1 of annual debt payment. SBA lenders require a minimum of 1.25x. The Bulletproof standard requires 2.0x. This deal clears the bank minimum but falls short of the Bulletproof target, leaving you with a thinner safety margin.

The stress test is where many deals that look good on paper fall apart. We model a 20% drop in revenue and check whether the business can still cover all debt obligations. This deal passes. Even at $756,166 in revenue (down from $945,208), the cash flow still services the debt. That is the kind of resilience you want in a financed acquisition.

Industry Context

📈 How This Deal Compares to the Construction / Contractor Industry

Construction / Contractor carries an SBA default rate of 6.8% against a 5.1% all-industry average. That is a statement about the category rather than this listing, but it does mean the coverage and stress-test figures carry more weight than the headline multiple.

Demand is partly discretionary and moves with the local economy, the service radius is local, and licensing keeps the competitive field narrow. Trailing earnings reflect a backlog that may already be spent, so a buyer needs to see signed work ahead rather than work completed behind.

Multiple
3.28x
Avg: 3.40x
Margin
31%
Avg: 12%
Default Rate
6.8%
All industries: 5.1%

The deal has some solid fundamentals but the mixed signals mean lenders will scrutinize it more closely.

Strengths and Risks

✓ What Works

  • Coverage still holds at 1.60 after a modeled 20% revenue drop.
  • Priced at 3.28x, inside the 2.89x to 3.91x band these businesses normally trade in.

⚠ Watch Out For

  • Coverage of 1.99 is above the bank floor but below where I want it. One slow quarter and the loan payment starts competing with payroll.
  • Every figure here comes from the listing and none of it is verified. A listing is marketing, and it is written by someone paid on the sale.
  • Margin of 31% is 2.7x the 12% industry average. Verify whether a market-rate manager salary sits in the expense base. If the owner is the labor, SDE is overstated and every figure below it moves.

Who This Deal Is For

Best fit for:

Experienced operators who can underwrite the specific risk flagged above and who have the capital to absorb a soft year without the loan payment becoming the problem.

This deal is not a fit for a first acquisition at the current asking price.

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6.8 / 10
Bulletproof Verdict
At 3.28x the coverage comes in at 1.99, which is thin once you model a bad quarter. The business may be fine. The price is the problem, and that costs you every month for ten years, not just at closing.

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Frequently Asked Questions

Is $975,000 a fair price for a construction / contractor business?

At 3.28x seller's discretionary earnings, this asking price is above the 3.00x Bulletproof threshold and near the 3.40x benchmark for construction / contractor businesses. The Bulletproof threshold and the category benchmark are two different yardsticks, and this deal sits outside the stricter of the two.

What is a good profit margin for a construction / contractor business?

The benchmark profit margin for construction / contractor businesses is approximately 12%. This listing operates at a 31% margin, which is well above the 12% benchmark for construction / contractor businesses, about 2.6x the category figure. That is a comparison against category medians, not a verdict on this listing.

Can I buy a construction / contractor business with an SBA loan?

Yes. Construction / Contractor businesses are commonly financed through SBA 7(a) loans using an 80/10/10 structure: 80% SBA loan, 10% seller financing, and 10% buyer down payment. For this $975,000 deal the down payment is $97,500, but cash required at closing is $126,750 once closing costs and a working capital reserve of $122,877 are counted. SBA lenders require a minimum DSCR of 1.25x, but conservative buyers target 2.0x or higher. This deal's 1.99x DSCR clears the bank minimum but falls short of the conservative target.

How much do construction / contractor business owners actually make?

Owner earnings vary widely based on revenue, pricing, and operational involvement. This construction / contractor business generates $296,917 in seller's discretionary earnings (SDE) before debt service. After SBA financing under the 80/10/10 structure, the buyer would take home approximately $147,998 per year. That post-debt figure is the number that actually matters for a financed acquisition, because it reflects what ends up in your pocket after every loan payment is made.