A consistent evaluation framework keeps you from being swayed by polished marketing decks. Run every opportunity through these six lenses.
1. Business quality
Recurring revenue, customer concentration, gross margins, working capital intensity, and durability of the moat.
2. Market
Is the addressable market growing, stable, or shrinking? Are tailwinds structural or cyclical?
3. Price
Entry multiple on trailing and forward EBITDA. Compare to recent comparable transactions. Be honest about whether the seller is being paid a premium for hard-to-replicate qualities.
4. Capital structure
Leverage ratio, debt covenants, interest coverage at downside cases, and equity cushion.
5. Sponsor
Track record, relevant operating experience, alignment, and bench depth.
6. Exit path
Who buys this company in five years, and at what multiple? If the only exit case is a strategic premium, the underwriting is too thin.
If you are evaluating a transaction in this space and want a candid second look, Solender Capital is happy to compare notes. Reach out through our contact page and share what you are working on.