The financials said “buy.” The service routes said “reprice.”

What this case study covers

A private equity firm was evaluating a water treatment service company: $9M in revenue, 400 accounts, 25 field staff, 62% gross margin, and $0.99M in EBIT, at an asking price of 9x EBIT. Independent due diligence on the accounts, routes, contracts, and people found risks the quality of earnings report couldn’t, and changed the price, the deal terms, and the first year after close.

Inside this case study

• How ~7% price increases were hiding ~9% annual account losses
• Why 67% ship-and-bill revenue and 35% top-10 concentration changed the risk
• Commercial vs. industrial economics: 42% drive time and ~2.6x EBIT per head
• Service reports that didn’t match system performance, and a retiring technical bench
• How the findings supported a 9x to 7x multiple, a $1.5M earnout, and retention agreements
• The 90-day plan and S&OP behind 11% growth, attrition under 3%, +5 points of EBIT, and ~$6.2M in total value