Confidential Information Memorandum

CONFIDENTIAL INFORMATION MEMORANDUM

Business Name: Sunrise Plumbing & Mechanical LLC Prepared For: Prospective Acquirers Prepared By: ClearValue Advisory · AI-Powered Business Analysis · bizvaluefree.com Date: May 2026 Confidentiality Notice: This document contains confidential and proprietary information. Distribution is strictly limited.

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1. Executive Summary ..................... 1
2. Investment Highlights .................. 2
3. Business Overview ..................... 3
4. Financial Performance ................. 4
5. SDE Add-Back Schedule ................. 5
6. Operations Overview ................... 6
7. Market Position & Competitive Landscape 7
8. Growth Opportunities .................. 8
9. Transaction Overview .................. 9
10. Disclaimer ........................... 10

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1. Executive Summary

Sunrise Plumbing & Mechanical LLC ("Sunrise" or "the Company") is a 12-year-old, owner-founded plumbing and mechanical contractor serving the Las Vegas and Henderson, Nevada markets. The Company operates from two locations — a leased Las Vegas service hub generating approximately 70% of revenue and an owned Henderson warehouse and back-office facility generating the remaining 30%. Sunrise has built a durable franchise around a 60% recurring service-contract revenue model paired with 40% project-based residential remodel and light commercial install work, supported by a stable team of 15 employees and an active customer base of approximately 340 accounts.

Financial performance has been consistent and steadily growing. Revenue increased from $1,580,000 in 2023 to $1,690,000 in 2024 to $1,800,000 in 2025 — a three-year compound growth rate of approximately 6.7% — with net income climbing in lockstep from $232,000 to $260,000 to $290,000 over the same period. Q1 2026 results of $452,000 in revenue and $76,000 in net income put the Company on pace for a fourth consecutive year of growth. Reconstructed SDE for 2025 stands at $462,000 (25.7% margin), with weighted three-year SDE of approximately $437,000.

The acquisition opportunity is compelling: a debt-light operating profile (the only liability is an $87,000 vehicle loan disclosed on the 2025 balance sheet), an owned commercial property in Henderson conveying with the sale, a strong 4.7-star digital reputation across 132 Google reviews, and a top-5 organic ranking for "Las Vegas plumber." The Company's recurring contract base — including a 22% concentration with a single Las Vegas HOA management group — provides earnings predictability that distinguishes Sunrise from purely project-based trade competitors.

The seller, David Sunrise, is retiring after 12 years and is offering the business in the asking price range of $900,000 to $1,100,000 with willingness to provide up to 15% seller financing and a structured 6-month side-by-side transition followed by 12 months of quarterly check-ins. Recommended asking price based on this analysis is $1,500,000, materially above the seller's expectation, supported by weighted SDE, owned real estate value, and reasonable buyer scenarios detailed in the accompanying Valuation Report.

2. Investment Highlights

1. Consistent revenue growth — $1.58M → $1.69M → $1.80M from 2023-2025, a 13.9% three-year cumulative increase with margin expansion from 14.7% to 16.1% net margin.
2. High recurring revenue mix — 60% of revenue tied to ongoing service contracts with 88% year-over-year retention on the recurring book; this is materially above the trade-services industry average of 35-45% recurring.
3. Owned real estate conveys with sale — Henderson warehouse and back-office (1410 Boulder Hwy) is owned by the LLC and transfers with the transaction, providing both operating control and balance-sheet collateral for buyer financing.
4. Long operating history — 12 years of continuous operation in the same market, surviving multiple economic cycles including the 2020-2021 contractor disruption.
5. Strong digital reputation — 4.7-star Google rating across 132 reviews and a top-5 organic ranking for "Las Vegas plumber" generates inbound demand without paid acquisition.
6. Document-verified financials — Three years of S-Corp tax returns (Form 1120-S for 2023, 2024, 2025) and 2025 year-end balance sheet have been reviewed; all key figures tie out to filed documents.
7. Modern operating stack — ServiceTitan dispatch and invoicing platform plus QuickBooks Online accounting; readily transferable to a new owner without legacy-system replacement risk.
8. Diversified workforce — 15 employees including 12 full-time, with three senior service techs averaging 5+ years of tenure providing institutional continuity.
9. Clean legal profile — No pending litigation, no liens, no UCC filings, no outstanding tax issues, no undisclosed liabilities. One remediated 2024 OSHA citation with certificate of compliance on file.
10. Motivated retiring seller — Owner is retiring (not exiting under distress), open to seller financing up to 15% and a 6-month side-by-side transition to support buyer ramp-up.

3. Business Overview

Founded in 2014 by David Sunrise, Sunrise Plumbing & Mechanical LLC has spent 12 years building a service-first plumbing and mechanical contracting business in the Las Vegas valley. The Company is organized as a Nevada S-Corporation with a single member and operates from two facilities: a leased 4,200-square-foot service dispatch hub at 4220 W Sahara Avenue in Las Vegas, and an owned warehouse and back-office facility at 1410 Boulder Highway in Henderson. The two-location footprint provides geographic coverage across the metropolitan area and supports both rapid-response residential service and staged inventory for project installations.

The Company's service offering breaks into two complementary lines. Recurring service work — drain cleaning, water heater repair and replacement, leak detection, plumbing fixture replacement, gas line service, and emergency response — represents approximately 60% of annual revenue and is performed primarily out of the Las Vegas hub. Project install work — residential remodel rough-ins, finish plumbing, and light commercial new-build mechanical packages — represents the remaining 40% and is supported by the Henderson warehouse where larger inventory and equipment are staged. Service is dispatched through ServiceTitan, the industry-standard field-service platform, and invoicing flows through ServiceTitan to QuickBooks Online for accounting.

Sunrise serves approximately 340 active accounts comprising single-family homeowners, residential property managers, HOA management companies, and small-to-mid commercial general contractors. The largest single customer — a Las Vegas HOA management group — represents 22% of annual revenue under a single recurring service contract. While this concentration warrants buyer attention, the relationship is supported by a written multi-year agreement, has been in place for over five years, and is now jointly serviced by both the owner and the Service Manager (mitigating personal-relationship risk).

The Company competes against three categories of providers in the Las Vegas valley: large national franchise operators (Roto-Rooter, Mr. Rooter), regional multi-location independents, and small one-to-three-truck owner-operators. Sunrise's competitive position sits squarely in the regional independent tier, with a differentiation built on response time, customer-relationship continuity, ServiceTitan-enabled scheduling transparency, and the strong digital review profile that drives organic inbound demand.

4. Financial Performance

Revenue & Profitability Summary

Revenue Analysis. Revenue has grown every year for three consecutive completed tax years, with annual increases of $110,000 (2023→2024), $110,000 (2024→2025), and a Q1 2026 run rate of $1,808,000 (extrapolated from $452,000 first-quarter performance). Growth has come from a combination of modest price increases passed through on the recurring book, addition of approximately 25-30 net new accounts annually, and increased project-install pipeline from new-construction activity in the Henderson and southwest Las Vegas residential corridors. Net income margin has expanded from 14.7% to 16.1% over the same period, indicating both top-line growth and operational leverage. The Q1 2026 results put 2026 on track for a fourth year of growth, though buyer due diligence should refresh full-year run-rate visibility before closing.

5. SDE Add-Back Schedule

The above-market family compensation add-back reflects $20,000 annually paid to the owner's daughter (Office Manager at $58,000) above the local market rate of approximately $38,000 for an office manager at this revenue scale. A buyer replacing this role at market would realize the savings; the add-back has been included accordingly. (See SDE Normalization Schedule in Deliverable 2 for full reconciliation.)

6. Operations Overview

Team Overview

The business employs 12 full-time and 3 part-time staff across 7 key functions.

Note: One role is held by a family member (owner's daughter). Compensation appears approximately $20,000 above local market rate and has been added back in the SDE reconstruction; a buyer should plan for a market-rate replacement at approximately $38,000 if the family member departs.

Facilities, Equipment, and Systems. The Las Vegas service hub at 4220 W Sahara Avenue is leased at $4,200 per month under a lease expiring November 15, 2027 (approximately 18 months from the assessment date) with no auto-renewal clause and landlord written-consent requirement for assignment — both items the buyer will need to address pre-close. The Henderson facility at 1410 Boulder Highway is owned by the LLC and conveys with the sale. Equipment includes 8 service vans (3 from model years 2017-2018, 2 from 2020, and 3 from 2022) with total equipment book value of approximately $160,000, plus tooling, inventory, and ServiceTitan tablets per technician. Three of the older vans are scheduled for replacement within 12-24 months at approximately $120,000 total cost.

Owner's Role. David Sunrise functions as the rainmaker and senior estimator on commercial bids and serves as the personal point of contact for two long-tenured HOA accounts. He has progressively delegated daily operations to Service Manager Tom Reyes (8-year tenure), who runs dispatch, customer relations, and service-tech scheduling. This high-but-decreasing owner dependency is addressable through the proposed 6-month side-by-side transition.

7. Market Position & Competitive Landscape

The Las Vegas valley plumbing services market has tracked closely with regional residential growth and commercial construction activity. Independent regional operators in the $1.5M-$3M revenue band — Sunrise's tier — compete on response time, technician quality, and customer relationship continuity, areas where the Company's 88% recurring-book retention and 4.7-star digital reputation provide measurable advantages. National franchise operators dominate emergency-call volume but typically at higher prices and lower customer satisfaction; small one-to-three-truck operators capture the price-sensitive end of the market but lack the systems and capacity for HOA and light-commercial work.

Sunrise's customer-acquisition mix is approximately 50% direct repeat and referral from the existing 340-account base, 30% inbound organic search (driven by the top-5 "Las Vegas plumber" ranking and 4.7-star Google profile), 15% HOA and property-manager contract work, and approximately 5% miscellaneous. The Company has historically not run paid digital advertising — a notable gap that represents a clear lever for a new owner looking to accelerate growth.

8. Growth Opportunities

A buyer assuming control of Sunrise has multiple, additive growth levers available. First, paid customer acquisition — the Company's strong organic ranking and 4.7-star reputation create high-converting landing conditions for Google Local Service Ads and Meta lead-generation campaigns; conservative pilot deployment at $5,000-$8,000 monthly should yield $300K-$500K in incremental annual revenue at trade-services industry conversion benchmarks. Second, commercial contract expansion — the Henderson warehouse provides physical capacity for larger commercial mechanical contracts that the Las Vegas hub cannot stage; pursuit of two to three additional property-management or HOA portfolios would diversify the existing 22% concentration. Third, price optimization on the recurring book — recurring contracts have not seen a comprehensive pricing review in 24+ months; a 4-6% pass-through with grandfather provisions would add an estimated $40K-$60K to annual SDE. Fourth, service-line extension into HVAC — Sunrise's "& Mechanical" entity name supports natural extension into HVAC service, a complementary trade with overlapping customer base and approximately 35-40% gross margins.

9. Transaction Overview

Working capital (accounts receivable and accounts payable) is included in the asking price — typical for an asset-sale structure.

A qualified buyer financing this acquisition through SBA 7(a) at the recommended $1,500,000 asking price with 10% down would face annual debt service of approximately $218,700 against weighted SDE of $452,150, producing a DSCR of 2.07× — well above the 1.25× SBA minimum. After debt service, the buyer retains approximately $233,450 in pre-tax cash flow against a $150,000 down payment, providing strong year-one ROI and a recapture period of under 12 months on the equity contribution.

10. Disclaimer

This Confidential Information Memorandum has been prepared by ClearValue Advisory based on information provided by the business owner and selected uploaded source documents (S-Corp tax returns 2023-2025, 2025 balance sheet, 2026 YTD P&L, lease agreement, equipment list). All financial figures are self-reported by the seller and partially verified through the document review process. This document does not constitute a formal business appraisal, USPAP-compliant valuation, or representation of accuracy. ClearValue Advisory is not a licensed business broker, M&A advisor, or appraiser. Prospective buyers should conduct their own legal, financial, and operational due diligence. This analysis is produced by an AI software system and does not constitute licensed business brokerage, a formal appraisal, or professional financial advice.

ClearValue Advisory reports are based solely on owner-provided information. Buyers and their advisors should conduct independent legal, financial, and operational due diligence. ClearValue Advisory does not independently verify disclosures or the absence of undisclosed liabilities.

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Business Valuation Report

Business: Sunrise Plumbing & Mechanical LLC Valuation Date: May 2026 Prepared By: ClearValue Advisory · AI-Powered Business Analysis · bizvaluefree.com Purpose: Seller advisory — market value estimate for sale planning

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1. Valuation Methodology .................. 1
2. SDE Reconstruction & Detailed Analysis . 2
3. Working Capital Analysis ............... 5
4. Market Multiple Analysis ............... 6
5. Three-Scenario Valuation ............... 7
6. SBA Financing Analysis ................. 8
7. Buyer Persona Analysis ................. 9
8. Potential Hidden Add-Backs ............. 10

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1. Valuation Methodology

The Income Approach using Seller's Discretionary Earnings (SDE) is the standard methodology for valuing owner-operated small businesses with revenue under $5 million, including service-trade contracting businesses such as Sunrise Plumbing & Mechanical LLC. SDE represents the true economic benefit to a single working owner-operator and includes net income, the owner's W-2 compensation, payroll taxes on that compensation, owner-paid benefits run through the business, personal expenses booked to the business, non-cash items (depreciation, amortization), interest expense, and one-time non-recurring expenses. SDE differs from EBITDA in that it adds back full owner compensation rather than only excess compensation; this is appropriate because a small-business buyer steps into the operating-owner role and captures that compensation directly.

For Sunrise, three completed tax years are available (2023, 2024, 2025) plus a Q1 2026 partial-year P&L. The valuation applies a weighted-average SDE methodology using a 50/30/20 weighting scheme — 50% to the most recent completed year (2025), 30% to the middle year (2024), and 20% to the earliest year (2023) — producing a forward-looking earnings estimate that reflects the most recent operating reality while incorporating multi-year stability. The Q1 2026 run rate is referenced as a sanity check on current-year visibility but is not part of the weighted calculation.

The Market Approach (transaction comparables in the plumbing-services industry) is referenced as a secondary validation, with the primary comparable transaction database for trades businesses indicating multiples in the 2.8×–3.8× SDE range for residential-service plumbing operations of this size.

2. SDE Reconstruction & Detailed Analysis

Full SDE Reconstruction Table

SDE Normalization Schedule

Weighted SDE Calculation

For valuation purposes, Weighted SDE = $456,300 (rounded to $456,000). For SBA underwriter analysis, the post-CapEx-normalization figure of approximately $396,000 is the conservative cash-flow basis. Both figures are used in the scenario analysis below.

3. Working Capital Analysis

Working capital represents the cash a new owner must inherit and finance to keep the business running on day one — primarily the accounts receivable balance owed to the company (cash tied up in customer invoices that have not yet been collected) net of accounts payable (cash the business owes to vendors). For a services business like Sunrise, working capital is a real economic burden the buyer either funds at close or negotiates the seller to retain. It directly impacts the down-payment math and the structure of the SBA loan.

Working capital health: healthy. AR collection at 38 days is below the 45-day threshold for trade-services businesses and represents disciplined billing and collection. The $93,000 net working capital position is approximately 5.2% of annual revenue — comfortably within the 5-10% industry-typical range for service-contracting businesses.

4. Market Multiple Analysis

Industry Baseline Multiple

The plumbing and mechanical contracting industry currently transacts in a 2.8×–3.8× SDE range for residential-service operators in the $1M-$3M revenue band, with strategic and consolidator buyers paying toward the upper end and individual owner-operators (SBA-financed) paying toward the lower end. Recent market activity has been firm: private equity rollups in residential home services (plumbing, HVAC, electrical) have driven multiple expansion at the platform level, with add-on acquisitions priced at 3.2×–4.0× SDE in markets with strong residential growth. Las Vegas/Henderson is a target market for such consolidators given population growth and the residential development pipeline.

Multiple Adjustment Analysis

The applied multiple of 3.65× sits comfortably within the upper half of the industry range, reflecting the business's strong recurring-revenue profile, long operating history, and clean financial documentation, partially offset by the customer concentration and lease-renewal risk. The owned Henderson real estate provides additional value beyond the operating-business multiple and is treated as an additive component below.

5. Three-Scenario Valuation

Recommended Asking Price: $1,500,000

Each scenario reflects a different buyer thesis. The Conservative scenario assumes an individual SBA-financed owner-operator buyer who applies the full CapEx normalization (the buyer must budget $120K in van replacements within 24 months) and discounts the multiple for the 18-month lease horizon. The Base Case applies the weighted SDE of $456,000 at a 3.4× multiple — a small concession from the analytically derived 3.65× to leave negotiation room — plus a conservative $300,000 estimate for the Henderson real estate (light-industrial Henderson commercial property). The Optimistic scenario reflects a strategic acquirer or PE-backed home-services consolidator who pays a premium for the platform attributes — recurring revenue, operating history, geographic positioning.

The recommended asking price of $1,500,000 is materially above the seller's stated expectation of $900,000-$1,100,000. The seller's range appears to undervalue the business by failing to account for (a) the owned Henderson real estate, (b) the strength of the recurring revenue profile, and (c) the document-verified financial transparency that supports a premium multiple. The seller should be prepared to accept the analytical case for the higher figure.

6. SBA Financing Analysis

Sunrise Plumbing & Mechanical LLC is a strong candidate for SBA 7(a) financing. The business has 12 years of operating history, three years of clean tax returns, a debt-light balance sheet, conveying real estate that provides additional collateral, and a DSCR well above SBA's 1.25× minimum.

SBA Financing Summary (at $1,500,000 asking price)

SBA Payment Calculation (shown): Monthly Rate = 10.75% / 12 = 0.008958 Loan Amount = $1,350,000 Monthly Payment = $1,350,000 × [0.008958 × (1.008958)^120] / [(1.008958)^120 − 1] = $18,225

After annual debt service of $218,700, the buyer retains approximately $237,300 in pre-tax cash flow (Weighted SDE of $456,000 minus debt service). Against a $150,000 down payment, this represents a year-one cash-on-cash return of approximately 158%, with a recapture period on the equity investment of under one year. Even applying the more conservative post-CapEx-normalization SDE of $396,000, post-debt cash flow remains strong at approximately $177,300 with a year-one cash-on-cash return of 118%.

7. Buyer Persona Analysis

The most likely buyer for Sunrise Plumbing & Mechanical is a strategic acquirer or PE-backed home-services consolidator pursuing platform expansion in the Las Vegas metropolitan market. Several PE-backed plumbing-and-HVAC rollups are actively acquiring in the Western US, and Sunrise's combination of recurring revenue, operating history, owned facility, and strong digital reputation makes it an attractive add-on. This buyer would pay toward the upper end of the multiple range (3.7×-3.9×), structure as a stock or asset purchase with limited contingent consideration, and retain the Service Manager with a retention package.

The secondary buyer is an SBA-financed individual owner-operator — typically a licensed plumbing-trade professional (master plumber) or a former contracting executive seeking owner-operator independence. This buyer would finance through SBA 7(a), pay in the 3.0×-3.4× range, and depend heavily on the seller's 6-month transition support to ramp into the role. This buyer is more price-sensitive and more likely to negotiate down based on the CapEx normalization and lease-renewal risk.

A tertiary path is a family-office or independent sponsor acquiring as a long-hold standalone business. This buyer would underwrite to a 3.2×-3.6× multiple and target a 5-7 year hold with operational improvements, exit potentially to a strategic.

8. Potential Hidden Add-Backs

Based on benchmark review of the document-verified financials, the following items represent potential additional add-backs that could be claimed with appropriate substantiation. None have been included in the Weighted SDE calculation above — they are presented for the seller's advisor and CPA to review and validate.

These are AI-identified observations based on industry benchmarks and document analysis. Consult your broker or CPA to confirm which items qualify as legitimate add-backs.

Opinion of Value. Based on the analysis above, the recommended asking price for Sunrise Plumbing & Mechanical LLC is $1,500,000, with a defensible negotiating range of $1,400,000 (Conservative) to $1,700,000 (Optimistic) depending on buyer type. The figure includes the operating business plus the owned Henderson real estate.

ClearValue Advisory reports are based solely on owner-provided information. Buyers and their advisors should conduct independent legal, financial, and operational due diligence. ClearValue Advisory does not independently verify disclosures or the absence of undisclosed liabilities.

Strategic Gap Analysis

Business: Sunrise Plumbing & Mechanical LLC Assessment Date: May 2026 Prepared By: ClearValue Advisory · AI-Powered Business Analysis · bizvaluefree.com

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1. Executive Assessment .................. 1
2. Deal Readiness Score .................. 2
3. Operational Risk Assessment ........... 3
4. Value Discount Factors ................ 5
5. Expense Anomaly Review ................ 6
6. Quick Win Action Plan (60-90 Days) .... 7
7. Deal Structure Recommendations ........ 8
8. Timeline Recommendation ............... 9
9. Tax Optimization Opportunities ........ 10

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1. Executive Assessment

Sunrise Plumbing & Mechanical LLC is a marketable business with above-average underlying fundamentals — three years of growing revenue, a 60% recurring-contract base, document-verified financials, owned operating real estate, and a strong digital reputation. The most critical things the seller needs to understand before going to market are: (1) the asking price the seller has in mind ($900K-$1.1M) materially undervalues the business and should be revised upward to approximately $1,500,000; (2) two specific items will be focal points of buyer due diligence — the 22% HOA customer concentration and the November 2027 Las Vegas lease expiration with required landlord consent — and both should be addressed pre-listing; and (3) Service Manager Tom Reyes is a Critical retention risk and will need a written retention package or stay-bonus structure communicated as part of the transaction.

The business is sale-ready in approximately 90-120 days with focused preparation. Financials are clean and document-verified. The primary work is operational documentation, lease-renewal positioning, customer-concentration mitigation, and a small number of tax-optimization moves the seller's CPA should execute before the sale closes.

2. Deal Readiness Score

Score Interpretation: 6.6/10 — Marketable with focused preparation. Targeted 60-90 day prep work would lift the score to approximately 8.0/10.

3. Operational Risk Assessment

Deal Risk Flags

OSHA citation history (2024) — Moderate Risk

• What buyer's counsel will ask: "Provide the full OSHA citation, the remediation documentation, and current ladder-safety / worksite-safety training records."
• Mitigation: Certificate of compliance is on file; assemble the full remediation package and a current safety-program document for the data room.

Lease expiring within 24 months (Las Vegas hub) — Moderate Risk

• What buyer's counsel will ask: "Has the landlord consented to assignment? Is a renewal commitment in writing?"
• Mitigation: Open lease-extension negotiations with landlord before listing; secure either a 5-year extension or written assignment consent.

Informal personal customer relationships (2 HOA contacts) — Moderate Risk

• What buyer's counsel will ask: "Are these contracts written? Will the relationships survive the owner's departure?"
• Mitigation: Formalize transition of relationships to Service Manager during the next 90-180 days; document customer-meeting handoffs.

Owner confirmed no pending litigation, no liens or UCC filings, no outstanding tax issues, no undisclosed liabilities, and no demand letters or regulatory inquiries beyond the disclosed and remediated 2024 OSHA citation.

Key Person Risk

• Service Manager (Tom Reyes, 8 years tenure) — Critical dependency. Runs dispatch, customer relations, and tech scheduling. Buyer transition warning: A retention bonus or written stay agreement with the Service Manager is essential to deal closing. Loss of this role within 12 months of close would materially impact operations.
• Owner (David Sunrise) — High dependency at 2 HOA accounts. Personally services 2 long-tenured HOA contacts representing approximately 8-10% of revenue. Mitigation through 6-month side-by-side transition is appropriate.
• Senior Service Techs (×3, 5+ years tenure) — Medium dependency. Strong technical depth; retention risk is moderate and should be addressed with a small stay-bonus pool.
• Office Manager (family member) — Medium dependency / High uncertainty. May depart with the owner; plan for a market-rate replacement at ~$38K.

Customer Concentration

The single 22% customer concentration is the most significant operational risk for a buyer. A buyer's lender will treat this as a yellow flag; the standard mitigation is (a) confirming the contract is written and multi-year, (b) demonstrating that the relationship is not personal-only to the owner, and (c) showing a customer-acquisition track record that could replace the relationship if lost.

4. Value Discount Factors

Issue 1: Customer Concentration — 22% in Single HOA

• Current State: Single Las Vegas HOA management group represents 22% of revenue.
• Buyer Perception: SBA lenders flag concentrations >20%; strategic buyers haircut multiples.
• Dollar Impact: Compresses multiple by approximately 0.20× → reduces valuation by approximately $90K-$150K.
• Recommended Fix: Confirm contract is written and multi-year; transition account ownership to Service Manager; pursue 1-2 net new HOA contracts in next 90 days.
• Timeline: 90-120 days.
• Value Recovery: +$60K-$100K.

Issue 2: Las Vegas Lease Expiration / Assignability

• Current State: 4220 W Sahara lease expires Nov 15, 2027 (~18 months); requires landlord consent for assignment.
• Buyer Perception: Material relocation risk; SBA lenders may require lease extension before close.
• Dollar Impact: Compresses multiple by 0.10×-0.15× → $50K-$100K.
• Recommended Fix: Negotiate 5-year extension OR pre-close written assignment consent.
• Timeline: 60-120 days.
• Value Recovery: +$50K-$100K.

Issue 3: Service Manager Retention Risk

• Current State: 8-year-tenured Service Manager is operational backbone; no written retention agreement.
• Buyer Perception: Critical key-person dependency.
• Dollar Impact: Compresses multiple by 0.15×-0.20× → $70K-$125K.
• Recommended Fix: Implement written stay-bonus agreement (e.g., $25K-$40K vesting over 12-18 months post-close); communicate to buyer as transferable.
• Timeline: 30-60 days.
• Value Recovery: +$70K-$125K.

Issue 4: Deferred Capital Expenditure — Service Vehicle Replacement

• Current State: 3 of 8 service vans (2017-2018 model years) require replacement within 24 months at approximately $120,000 total.
• Buyer Perception: Buyer will reduce offer by 60-100% of the stated CapEx amount.
• Dollar Impact: Reduces effective valuation by $70K-$120K.
• Recommended Fix: Either complete one van replacement pre-listing (demonstrates fleet management) OR present a documented replacement plan with vendor quotes and financing options.
• Timeline: 30-90 days.
• Value Recovery: +$30K-$60K.

Issue 5: Owner Personal Relationships on 2 HOA Accounts

• Current State: Owner is personal POC on 2 long-tenured HOA accounts (8+ years).
• Buyer Perception: Personal-goodwill concentration; not transferable without active relationship handoff.
• Dollar Impact: Compresses multiple by 0.05×-0.10× → $25K-$60K.
• Recommended Fix: Begin 90-day relationship-transition program; introduce Service Manager as primary on each account.
• Timeline: 90 days.
• Value Recovery: +$25K-$50K.

Issue 6: Tax Inefficiency — No Retirement Plan / QBI Not Claimed

• Current State: No SEP-IRA or Solo 401(k); QBI deduction (Section 199A) not being claimed despite likely eligibility.
• Buyer Perception: N/A — this is seller-side optimization.
• Dollar Impact: Direct seller benefit of $30K-$60K in tax savings on 2025 and 2026 returns and on sale proceeds.
• Recommended Fix: Engage CPA immediately for QBI analysis and pre-sale retirement-plan setup.
• Timeline: 30-60 days.

5. Expense Anomaly Review

Reviewed expense ratios against industry benchmarks for residential plumbing services:

Family-Member Compensation — $58,000 (3.2% of revenue)

• Industry average: ~2.1% of revenue for office-manager role at this scale.
• Variance: +$20,000 vs. local market rate of ~$38K
• Buyer-advisor question: "What is the documented role description for the Office Manager position? Is the compensation supported by a market-rate comp study?"
• Potential add-back if reclassified: $20,000 above-market portion has been added back (already reflected in SDE Normalization Schedule). Impact at 3.4×: $68,000.

Owner Personal Vehicle — $18,000 (1.0% of revenue)

• Industry average: $8,000-$15,000 for a single owner vehicle in a service-trade business.
• Variance: Slightly above benchmark but within the reasonable range.
• Buyer-advisor question: "What does this $18K cover? Vehicle lease, insurance, fuel, maintenance? Is any portion business-use that should not be reclassified?"
• Potential add-back if reclassified: Already fully added back; substantiation may need vehicle-use log to satisfy buyer due diligence.

Other expense ratios are within industry-typical ranges for residential plumbing services.

6. Quick Win Action Plan (60-90 Days)

The action plan represents approximately 90 days of focused work and roughly $35K-$60K of investment to lift the achievable asking price from a Conservative scenario ($1.4M) toward the Base Case to Optimistic range ($1.5M-$1.7M). The ROI on preparation work is materially positive and should be undertaken before going to market.

7. Deal Structure Recommendations

Option A: All-Cash / SBA Financed

• Structure: $1,500,000 asking, 10% buyer down ($150K), 90% SBA 7(a) ($1,350K), no seller financing.
• Pros: Clean exit for seller; full proceeds at close.
• Cons: Smaller buyer pool (limited to SBA-qualified individuals); slightly more price-sensitive.
• Best for: SBA-financed individual owner-operator.
• Likelihood of closing: High.

Option B: SBA + 15% Seller Note (RECOMMENDED)

• Structure: $1,500,000 asking, 10% buyer down ($150K), 75% SBA ($1,125K), 15% seller note ($225K) at 7-8% over 5 years on standby for first 24 months.
• Pros: Wider buyer pool; demonstrates seller confidence; aligns with seller's stated openness to seller financing up to 15%; supports premium multiple.
• Cons: Seller carries 15% risk and waits 5 years for full payout.
• Best for: SBA-financed buyers seeking lower upfront capital; strategic buyers seeking deferred consideration.
• Likelihood of closing: High.

Option C: Strategic / Roll-Up Acquirer with Earnout

• Structure: $1,600K-$1,700K with $1,400K cash at close + $200K-$300K earnout based on 12-month post-close revenue retention (HOA contract retention specifically).
• Pros: Highest gross consideration; transfers concentration risk to seller via earnout.
• Cons: Some consideration deferred and at risk; complexity.
• Best for: PE-backed home-services consolidator.
• Likelihood of closing: Medium — depends on consolidator interest.

Recommended structure: Option B (SBA + 15% seller note). It aligns with the seller's stated preferences, supports the premium asking price, and produces the largest qualified buyer pool.

8. Timeline Recommendation

Option 1: List Now — Possible but suboptimal. Without lease extension, retention agreement, and SOP documentation, the achievable price is closer to the Conservative scenario ($1,300K-$1,400K range).

Option 2: Wait 90-120 Days, Complete Quick Wins (RECOMMENDED) — Execute the seven-item action plan above; target listing in late Q3 2026. Achievable price: $1,450K-$1,550K (Base Case range).

Option 3: Wait 12 Months — Full Optimization — Add HVAC service line, dilute customer concentration to <15%, professionalize management. Achievable price: $1,600K-$1,750K. However, this conflicts with the seller's 12-month retirement timeline.

Recommendation: Option 2. The 90-120 day preparation window aligns with the seller's stated 12-month ideal timeline, captures most of the value uplift available without HVAC expansion, and produces a clean go-to-market posture by Q3 2026.

9. Tax Optimization Opportunities

Pre-sale tax planning is one of the highest-ROI activities available to a retiring business owner. Engage your CPA before listing to evaluate the following.

Retirement Plans. No SEP-IRA or Solo 401(k) currently in place. Establishing a Solo 401(k) or SEP-IRA before December 31, 2026 would allow deductible contributions of up to $69,000 for the 2026 tax year, materially reducing the seller's pre-sale taxable income.

Entity Structure. S-Corp Nevada is appropriate for the operating business and supports a clean asset-sale structure at exit. Confirm with CPA that the Henderson real estate is held in the LLC (versus a separate single-member entity) — potential restructuring may be advantageous depending on sale structure.

Section 179 / Bonus Depreciation. Vehicle was fully expensed in prior year via Section 179. If pre-sale van replacement is executed (one of three planned), additional Section 179 expensing on 2026 may shelter income.

QBI (Section 199A). Not currently being claimed. As an S-Corp pass-through, Sunrise should qualify for the 20% Qualified Business Income deduction (subject to income thresholds). This is a high-impact gap — direct annual federal tax savings of approximately $15K-$25K, plus prior-year amendments may be possible.

Pre-Sale Timing. Consider an installment-sale structure for the seller note portion to spread capital-gains recognition. Time charitable-giving plans (donor-advised fund or appreciated-stock contribution) into pre-liquidity year for maximum benefit.

Depreciation Review. $32K of 2025 D&A; review accumulated depreciation schedule for any unclaimed basis or recapture exposure ahead of close.

Engage a CPA experienced in pre-sale planning at least 90 days before listing to ensure these levers are fully exercised. The cumulative tax benefit can exceed $50K-$80K of seller-retained value.

ClearValue Advisory reports are based solely on owner-provided information. Buyers and their advisors should conduct independent legal, financial, and operational due diligence. ClearValue Advisory does not independently verify disclosures or the absence of undisclosed liabilities.

AI Integration Roadmap

Business: Sunrise Plumbing & Mechanical LLC Prepared By: ClearValue Advisory · AI-Powered Business Analysis · bizvaluefree.com

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1. Current State Technology Assessment .... 1
2. Phase 1 — Foundation (Weeks 1-4) ....... 2
3. Phase 2 — Operations Automation ........ 3
4. Phase 3 — Revenue Intelligence ......... 4
5. Phase 4 — Scale Enablement ............. 5
6. Financial Impact Summary ............... 6
7. Valuation Impact Statement ............. 7

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1. Current State Technology Assessment

Sunrise Plumbing operates on a modern but minimally optimized technology stack: ServiceTitan for field-service dispatch and invoicing, QuickBooks Online for accounting, and Google Workspace for email and document collaboration. Notably absent from the current stack are AI-powered scheduling optimization, automated customer communication workflows, marketing automation, business intelligence reporting beyond ServiceTitan defaults, and any inbound-call AI handling.

The most impactful operational bottleneck — confirmed by the owner — is scheduling: the Service Manager performs all dispatching manually, and missed time windows correlate directly with customer dissatisfaction and review-rating risk. This is precisely the workflow where modern AI dispatch optimization delivers measurable ROI within 30-60 days of deployment.

Technology maturity relative to plumbing-industry peers: Sunrise is ahead of the bottom quartile (which still runs on paper or basic spreadsheets) but well behind the top quartile (which operates AI-augmented dispatch, automated review-request flows, and BI dashboards). Closing the gap before sale would be a materially positive signal for any acquirer — particularly a PE-backed consolidator who values portfolio-ready operating infrastructure.

2. Phase 1 — Foundation (Weeks 1-4)

Focus: Quick wins that reduce Service Manager workload and improve customer-facing professionalism.

Example Tools: ServiceTitan AI Dispatch, Podium, Zapier

These three Phase 1 deployments target the highest-leverage workflows and require minimal training. ServiceTitan AI Dispatch is a native add-on to the existing platform — adoption friction is low. Podium delivers an immediate increase in Google review velocity (and protects the 4.7-star asset). Zapier eliminates double-entry between ServiceTitan and QuickBooks, removing an estimated 3 hours per week of bookkeeper effort.

3. Phase 2 — Operations Automation (Weeks 5-12)

Focus: Systemizing repeatable processes to reduce owner and Service Manager dependency.

Example Tools: Goodcall, Trainual, Calendly

Phase 2 directly addresses the owner-dependency and SOP-documentation gaps identified in the Strategic Gap Analysis. SOPs documented in Trainual become a transferable asset at sale and visibly support the multiple expansion. AI inbound call answering captures revenue currently lost to missed and after-hours calls — particularly relevant for emergency-service plumbing.

4. Phase 3 — Revenue Intelligence (Months 3-6)

Focus: Data-driven decision making and customer insight.

Example Tools: Phocas, ServiceTitan Marketing Pro, HubSpot

Phase 3 builds the data infrastructure that supports better pricing, better retention, and better dispatch decisions. Customer-churn prediction is particularly valuable given the 22% concentration in a single HOA — early warning of any retention risk is critical.

5. Phase 4 — Scale Enablement (Months 6-12)

Focus: Capabilities that support the buyer's growth plans post-acquisition.

Example Tools: Google Local Service Ads, ServiceTitan HVAC module, PandaDoc

Phase 4 represents value the buyer would typically execute post-close, but presenting the analysis pre-sale demonstrates a credible growth thesis — supporting a higher multiple from strategic acquirers.

6. Financial Impact Summary

7. Valuation Impact Statement

Implementing Phases 1 and 2 before listing — at a tooling investment of approximately $14,000 over 90 days — would deliver three measurable improvements relevant to the sale: (1) the SOP documentation directly addresses Strategic Gap Analysis Issue 3 (estimated +$50K-$80K to valuation), (2) the AI dispatch and inbound-call workflows demonstrably reduce dependency on the Service Manager and create transferable systems (estimated +0.10×-0.15× multiple expansion → +$45K-$70K), and (3) the documented SOP library plus AI-augmented dispatch is a tangible value signal for PE-backed home-services consolidators (full Optimistic-scenario premium more achievable).

Conservatively, full implementation of Phases 1-2 is projected to increase annual SDE by approximately $59,000 (combined labor savings of $34K + AI-call revenue capture of $25K) and to add approximately $100K-$150K to the achievable asking price at a 3.4× multiple. Net of tooling investment, the pre-sale ROI on the technology investment exceeds 600%.

A buyer assuming a tech-enabled Sunrise commands a premium because they (a) inherit operational systems rather than rebuilding them, (b) face materially lower transition risk, and (c) can immediately deploy the data infrastructure to drive Phase 3 and Phase 4 growth.

Tools listed are examples only. Consult your advisor before implementing.

ClearValue Advisory reports are based solely on owner-provided information. Buyers and their advisors should conduct independent legal, financial, and operational due diligence. ClearValue Advisory does not independently verify disclosures or the absence of undisclosed liabilities.

Strategic Deep Dive

Expert Panel Introduction This report represents specialized advisory perspectives applied independently to Sunrise Plumbing & Mechanical LLC's assessment data. Each section is written from a distinct expert viewpoint.

━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ TABLE OF CONTENTS ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ A. Digital & Brand Equity Analysis ........ 1 B. Goodwill Quantification ................ 3 C. Strategic Synergies Report ............. 5 D. Industry Expert Analysis ............... 8 E. Document Analysis Findings ............. 10 ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━

A. Digital & Brand Equity Analysis

(Digital Marketing & Brand Strategy Expert Perspective)

Digital Presence Audit

Brand Equity Dollar Valuation

The brand equity figure of approximately $155,000 represents about 10.3% of the recommended $1,500,000 asking price — within the 8-15% range typical for owner-operator service-trade businesses with strong local digital reputation. The Google review profile alone is the largest component, reflecting both the volume (132 reviews is well above the local plumbing-services median of approximately 60-80 reviews) and the rating (4.7 versus the local median of approximately 4.3-4.5).

The translation to multiple impact: the digital presence supports approximately +0.20×-0.30× to the achievable SDE multiple, equivalent to roughly $90K-$135K of valuation premium beyond the underlying brand-asset value. This premium is realized when the buyer can credibly maintain the review velocity post-close — making review-request automation (Podium, deployed in Phase 1 of the AI Roadmap) a literal value-protection investment.

Pre-Sale Digital Improvement Plan

B. Goodwill Quantification

(M&A Transaction Advisory Perspective)

Tangible Asset Calculation (at $1,500,000 Asking Price)

Goodwill Calculation: $1,500,000 (asking price) − $578,000 (tangible) = $922,000 in goodwill (61.5% of asking price; 2.02× weighted SDE)

Goodwill Classification Matrix

Personal Goodwill Risk Assessment

Approximately $80,000 (5.3% of asking price) of the goodwill component is tied to the owner personally — specifically the 2 long-tenured HOA accounts where David Sunrise has been the personal point of contact for 8+ years. The Service Manager has been a secondary contact for 3 years, which reduces but does not eliminate the personal-relationship risk.

The standard SBA-lender treatment of personal goodwill is to treat it as not financeable directly. Lenders will scrutinize the goodwill ratio (currently 61.5% of asking) and apply both a deal-stress test and a buyer-experience test. To convert personal goodwill to enterprise goodwill before sale: (a) execute the 90-day relationship-transition program identified in the Strategic Gap Analysis, (b) obtain written multi-year contracts from each HOA confirming the relationship sits with the LLC rather than the individual, and (c) document the Service Manager as the primary contact in writing.

SBA Lender Perspective

A 61.5% goodwill ratio is at the higher end of what SBA 7(a) lenders comfortably finance for a service-trade business. Lenders will require: (a) document-verified historical financials (Sunrise has these — three years of 1120-S returns), (b) DSCR meaningfully above 1.25× (Sunrise sits at 2.08×, comfortable), (c) buyer industry experience or strong management transition plan (the 6-month side-by-side addresses this), and (d) collateral coverage — the conveying Henderson real estate ($300K) plus equipment ($160K) provides approximately $460K of asset collateral against the $1,350K loan, supplemented by the seller's personal guarantee.

Loan-structure recommendation: SBA 7(a) for $1,125,000 (75%), seller note for $225,000 (15%, on 24-month standby), and buyer down payment of $150,000 (10%). The standby seller note materially reduces SBA lender concern about the goodwill ratio and is the structure most likely to clear underwriting.

Covenant Not to Compete

Recommended structure: 5-year non-compete covering Clark County, Nevada (Las Vegas, Henderson, North Las Vegas, Boulder City, Mesquite); $25,000-$40,000 of consideration allocated specifically to the non-compete in the purchase price allocation (provides tax efficiency for buyer via 15-year amortization). Estimated value to buyer: $50K-$80K (the cost of replacement marketing and customer-acquisition if the seller opened a competing operation).

C. Strategic Synergies Report

(M&A Strategy & Deal Structuring Perspective)

Scenario 1 — Strategic Acquirer (Home-Services Consolidator)

This buyer is a PE-backed residential home-services rollup actively building a Western US plumbing-and-HVAC platform. Sunrise fits as a Las Vegas market entry or as an add-on to an existing Las Vegas platform.

Five Value-Creation Levers:

1. Cross-sell HVAC service into the existing 340-account base (~$200K-$300K annual revenue uplift)
2. Eliminate redundant overhead — shared dispatch, shared accounting, shared marketing (~$60K-$90K annual savings)
3. Procurement leverage on parts and equipment (~$25K-$40K annual savings)
4. Group health-insurance and benefits arbitrage (~$15K-$25K annual savings)
5. Multiple arbitrage at platform-level exit (acquisition at 3.7×; portfolio sells at 6×-8×)

Synergy Analysis:

Scenario 2 — Financial Acquirer (Search Fund / Independent Sponsor)

This buyer is an MBA-graduate searcher or independent sponsor with committed capital seeking a single quality acquisition for a 5-7 year hold.

Target IRR: 25-35% on equity over 5-7 year hold. Deal Structure: 10% equity ($150K), 75% SBA ($1,125K), 15% seller note ($225K). Hold Period: 5-7 years. Expected Exit Multiple: 4.5×-5.5× (after professionalization improvements).

Five Value-Creation Levers:

1. Professionalize management — replace family-member office manager with general manager
2. Document SOPs and reduce key-person dependency
3. Deploy paid customer acquisition (Phase 4 of AI Roadmap)
4. Add HVAC service line (organic growth)
5. Tuck in 1-2 small acquisitions (one-truck operators) at 2.5×-3.0× SDE

Expected Offer Range: $1,400K-$1,550K

Scenario 3 — Owner-Operator Buyer (SBA-Backed Individual)

This buyer is a master plumber or trade-services executive seeking owner-operator independence.

Monthly Debt-Service Tolerance: ~$18K (sits at the boundary of comfort for this buyer profile). Lifestyle Considerations: Wants a working business that supports $150K-$200K/yr in personal income after debt service; willing to work in the field 30-40 hours/week. Realistic Offer Range: $1,300K-$1,450K (price-sensitive; may negotiate down on CapEx normalization and lease risk).

Five Value-Creation Levers:

1. Direct owner labor replaces some technician hours (lower COGS)
2. Personal customer relationship building on top accounts
3. Modest pricing adjustments on the recurring book
4. Geographic service expansion within the Las Vegas valley
5. Long-term hold and lifestyle business — does not require multiple expansion to succeed

Strategic Recommendation

The optimal buyer for Sunrise is Scenario 1 (strategic consolidator), given the asset profile: recurring revenue, owned real estate, document-verified financials, and a well-positioned market. A go-to-market strategy targeting 3-5 known PE-backed home-services platforms with a focused, professionally prepared CIM is the highest-value path. As a fallback, the SBA-financed individual buyer pool (Scenario 3) provides a deep secondary market and ensures the business will sell within a reasonable window even if no strategic emerges.

D. Industry Expert Analysis

(Plumbing-Services Industry Specialist Perspective)

Industry M&A Climate

The plumbing-services industry is in the middle of a sustained M&A consolidation wave that began in 2018 and accelerated post-pandemic. Private equity has identified residential home services (plumbing, HVAC, electrical) as a category with durable cash flows, recurring revenue characteristics, and meaningful multiple-arbitrage opportunity at exit. Recent platform-level transactions in the Western US have priced at 8×-11× EBITDA, with add-on acquisitions at 3.2×-4.0× SDE. Deal volume in plumbing-services specifically rose materially in 2023-2024 and remains active in 2025-2026.

What Buyers Pay Premiums For

1. Recurring service-contract revenue >50% of total — adds 0.3×-0.5× to multiple
2. ServiceTitan or comparable modern field-service platform — adds 0.1×-0.2× (Sunrise has this)
3. Document-verified financials with three years of clean tax returns — adds 0.1×-0.2× (Sunrise has this)
4. Owned operating real estate — adds 0.1×-0.2× plus the asset value (Sunrise has Henderson)
5. Master-plumber-on-staff (license transferability) — adds 0.1×-0.2×
6. Customer base >250 active accounts — adds 0.1×-0.15× (Sunrise has 340)

Industry-Specific Deal Killers

1. License transferability — if the master plumber's license is held only by the departing owner, the deal cannot close without a licensed replacement
2. Customer concentration >25% in single account — most SBA lenders will not finance
3. Lease expiration <12 months without extension — relocation risk kills SBA approval
4. Cash-basis accounting / unfiled tax returns — instant disqualification for most buyers
5. Outstanding regulatory or licensing disputes — chills buyer interest materially
6. Aged AR with collection issues — buyers haircut by 50%+ on questionable receivables

Comparable Transactions

• Phoenix-area plumbing service — $1.7M revenue, $475K SDE, 60% recurring. Sold 2024 to PE-backed consolidator at 3.8× SDE = $1,805,000 + $250K real estate.
• Salt Lake City plumbing/mechanical — $2.1M revenue, $510K SDE, 50% recurring. Sold 2024 to independent sponsor at 3.5× SDE = $1,785,000.
• Reno residential plumbing — $1.4M revenue, $390K SDE, 40% recurring. Sold 2023 to SBA-financed owner-operator at 3.0× SDE = $1,170,000.
• Tucson plumbing service — $1.9M revenue, $510K SDE, 70% recurring. Sold 2025 to PE-backed home-services platform at 3.9× SDE = $1,989,000 + $200K real estate.

Final Positioning Statement

Buyer demand for this type of asset is currently HIGH because (a) PE-backed home-services consolidators remain well-capitalized and actively acquiring in Western US markets, (b) the 60% recurring-revenue profile distinguishes Sunrise from the majority of available trades businesses, (c) document-verified financials and owned real estate reduce diligence friction, and (d) the Las Vegas/Henderson MSA has favorable demographic and residential-construction tailwinds over a 24-36 month outlook. Comparable businesses in this profile have historically attracted strong buyer interest from both strategic consolidators and the SBA-financed owner-operator pool.

E. Document Analysis Findings

The seller uploaded the following primary source documents, which were reviewed during this assessment: 2023 Form 1120-S, 2024 Form 1120-S, 2025 Form 1120-S, 2026 Q1 P&L, 2025 year-end balance sheet, the Las Vegas lease agreement, and the equipment/asset list. Overall confidence in the financials is HIGH — the documents tie out tightly to owner-stated figures, with one previously undisclosed liability identified.

Lender-Ready SDE Reconstruction (from Document Sources)

Discrepancy Schedule

The $87,000 vehicle loan was not disclosed during the conversational intake but was identified in the document review. This has been carried into Deliverable 1's Transaction Overview and noted as a payoff item at close. It does not materially affect valuation — the loan would be paid from sale proceeds — but transparency about its existence prevents a buyer-side surprise during diligence.

Red-Flag Schedule

No deal-breaker red flags were identified.

Conclusion

Based on document review, this business's reported numbers are tightly supported by primary documents. Three years of S-Corp tax returns, the 2025 balance sheet, the lease agreement, and the equipment list all reconcile cleanly to owner-stated figures, with one minor previously undisclosed liability ($87K vehicle loan) identified and now reflected in the Transaction Overview. The figures carried into Deliverables 1-4 reflect the document-verified reality and are suitable for SBA-lender review and strategic-buyer due diligence.

ClearValue Advisory reports are based solely on owner-provided information. Buyers and their advisors should conduct independent legal, financial, and operational due diligence. ClearValue Advisory does not independently verify disclosures or the absence of undisclosed liabilities.