Deal Risk Scorer

What This Score Is and Isn't

This is a structured first-pass risk assessment, not a substitute for due diligence. It surfaces which factors are pulling a deal toward higher risk so you know what to investigate first. It doesn't verify the inputs — those need to come from real documents.

The Six Signals

• Owner dependence. The single biggest predictor of post-close regret. A business that runs without the owner is a real asset; one where the owner is the business is a contract for the owner's time.
• Customer concentration. Above 40% from any single customer (or 50% from top 3) means a single departure materially changes the business. Pricing should reflect that.
• Revenue trend. Flat is usually fine; declining compresses both valuation and financing options. Growing doesn't reduce risk on its own — but stable+growing is materially better than stable+flat.
• Add-back ratio. Add-backs are normal. Add-backs over 40% of SDE means the buyer needs to verify each one against source documents. Heavy add-backs paired with weak documentation is a classic seller-fiction pattern.
• Documentation quality. A QoE report on a $500K deal is overkill but a CPA-prepared P&L is the minimum bar. Tax-returns-only without internal financials is a red flag.
• Lease remaining. SBA lenders typically want lease term to extend past loan maturity. Less than five years remaining can break the financing entirely.

How to Use the Score

Below 30: clean deal, normal diligence applies. 30–60: at least one material concern — focus diligence on the top contributors before committing capital. Over 60: either walk away or restructure (lower price, longer transition period, additional contingencies).

The score is heuristic. A deal at 65 with a known mitigation (e.g., multi-year transition agreement plus seller earn-out) can be more workable than a deal at 45 with no leverage to address the issues.