I've reviewed dozens of deals from retiring founders selling laundromats, HVAC companies, car washes, and small agencies. Here's the pattern I keep seeing:

The seller always has a story. "We're growing." "Next year will be our best year." "We just landed a big client." But stories don't show up on a balance sheet. Numbers do.

Here are the 5 numbers I check before I spend another minute on a deal:

1. Owner's Discretionary Earnings (SDE) vs. Reported Profit

If the gap between what the owner takes home and what the P&L shows is massive, someone is hiding costs — or inflating earnings. Both are red flags.

2. Customer Concentration Ratio

If one client represents more than 25% of revenue, you're not buying a business. You're buying a client relationship that can walk away.

3. CapEx as % of Revenue

A car wash doing $400K/year but needing $80K in equipment replacement annually? That's a 20% hidden tax on your returns. Most listings don't surface this.

4. Trailing 3-Month vs. Trailing 12-Month Revenue

If the last 3 months are significantly below the 12-month average, the business is declining. Sellers will use the 12-month number to justify the price. Don't let them.

5. Seller Financing Terms

If a seller won't finance 10-20% of the deal, they don't believe in the business they're selling. Full stop.

These 5 numbers take 15 minutes to calculate and will save you from 90% of bad deals.

I built an entire Notion-based audit system around this framework — it auto-calculates these ratios and flags deals before you waste time on LOIs. If you're actively searching, check it out.