Financial institutions

Valuation and Quality of Earnings for SBA acquisition lenders.

Start with the acquisition file you're already working on. Chief turns financial diligence into a source-linked underwriting baseline without requiring a core-system replacement.

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01 · Acquisition diligence

Every change-of-ownership file starts with the same questions.

What does the business really earn? Does the purchase price hold up? What did the lender rely on? Chief answers them in one documented file.

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NACVA-certified valuation expertise

Chief's valuation work is backed by credentialed valuation professionals, bringing recognized valuation standards and professional judgment into the acquisition analysis. Deliverables are built to meet applicable SBA valuation and Quality of Earnings requirements under SOP 50 10 8.1, including Appendix 15.

SBA SOP 50 10 8.1

Acquisition diligence just changed.

SBA's updated change-of-ownership framework places greater emphasis on documented historical earnings and requires a Quality of Earnings for qualifying transactions.

Read the 1-Page SBA 8.1 Lender Brief

Quality of Earnings

Know which add-backs actually hold up.

01Start with reported earnings
Start with what the financials say.
- Bring the borrower financials together
- Reconcile reported earnings
- Establish the starting point for analysis
02Test the adjustments
See which addbacks hold up.
- Review owner and one-time expenses
- Trace adjustments back to supporting evidence
- Separate supported adjustments from questionable ones
03See normalized cash flow
See what the business can actually support.
- Arrive at normalized earnings
- See the impact of accepted adjustments
- Carry the result into valuation and credit analysis

QUALITY OF EARNINGS

Harbor Manufacturing Co.

Industry: Metal fabrication
TTM revenue: $9.4M
Periods: FY24 · FY25 · TTM

TTM revenue

$9.4M

Reported EBITDA

$615K

EBITDA margin

6.5%

Operating cash flow

$538K

Historical performance	FY 2024	FY 2025	TTM Jul 2026
RevenueTax return · P&L	$8.1M	$8.9M	$9.4M
Gross profitP&L	$2.44M	$2.58M	$2.63M
Operating incomeP&L	$496K	$470K	$441K
EBITDAP&L · GL	$688K	$652K	$615K
Net incomeTax return	$362K	$331K	$298K

REPORTED EBITDA · STARTING POINT

$615K

Reconciled to the FY 2025 tax return and TTM interim statements.

ADJUSTMENT REVIEW · TTM JUL 2026

Reported EBITDA $615K

Owner compensationOwner-related · 2025 general ledger	SUPPORTED	+$120K
One-time legal expenseNon-recurring · Legal invoices	SUPPORTED	+$45K
Related-party rentRelated party · Lease agreement	SUPPORTED	+$35K
Non-recurring revenueRevenue quality · Sales ledger	SUPPORTED	−$22K
Vehicle expenseOwner-related · Bank statements	PARTIALLY SUPPORTED	+$18K
“Growth investment”Proposed addback · Management explanation	EXCLUDED	+$0K

EVIDENCE

Owner compensation

Borrower proposed: +$120K
Chief supported: +$120K
Status: SUPPORTED
Period: TTM Jul 2026

SOURCE

2025 general ledgerPayroll detailTax return

ANALYST NOTE

Seller salary above the cost of a market-rate replacement GM.

Market replacement cost documented. Full amount supported.

Every adjustment is reviewed against source documents before it counts.

REPORTED EBITDA

$615K

SUPPORTED ADJUSTMENTS

+$196K

NORMALIZED EBITDA

$811K

EBITDA BRIDGE

Every adjustment changes the picture.

NORMALIZED CASH FLOW

Normalized EBITDA

$811K

Annual debt service

$605K

DSCR

1.34x

Debt / EBITDA

4.4x

Valuation earnings base $811K · indicated value $4.78M at 5.9x

Tax returnsInterim statementsP&LBalance sheetGeneral ledgerPayrollBank statementsDeal documents

NORMALIZED EBITDA

$811K

VALUATION INPUT

$811K

Valuation

Does the purchase price hold up?

01Find the real earnings
Start with what the business really earns.
- Bring the financials together
- Find one-time and owner-related expenses
- Turn reported earnings into normalized earnings
02See what it's worth
See what the business is worth.
- Use more than one valuation method
- See the range, not just a single number
- Understand what supports the conclusion
03Test the purchase price
See whether the price holds up.
- Compare purchase price to concluded value
- See how the deal is financed
- Check coverage on normalized earnings

BUSINESS VALUATION

Harbor Manufacturing Co.

Industry: Metal fabrication
TTM revenue: $9.4M

REPORTED EBITDA

$615K

ADJUSTED EBITDA

$0K

$615K + $0K normalization adjustments

NORMALIZATION ADJUSTMENTS

Owner compensation	+$120K
One-time legal expense	+$45K
Related-party rent	+$35K
Non-recurring revenue	−$22K
Vehicle expense (partial)	+$18K
“Growth investment” (excluded)	+$0K
Total adjustments	+$0K

Reported $615KNormalized $615K

NORMALIZED EARNINGS DISTRIBUTION

Reported$615K

Adjusted$615K

$520KHover the curve$920K

VALUATION METHODS

Income approachDiscounted cash flow$4.7M
Market approachGuideline public companies$5.0M
Comps approach17 private transactions$4.8M

ESTIMATED BUSINESS VALUE

···

Enterprise value · Normalized EBITDA $811K × 5.9x

Valuation range$4.5M – $5.2M · Estimated Enterprise Value: $4.8M

Income$4.70M · Discounted cash flow

Market$5.00M · Guideline public companies

Comps$4.80M · 17 private transactions

$4.20MHover the curve$5.50M

PURCHASE PRICE

$5.1M

CONCLUDED VALUE

$4.8M

Price is 6.3% above concluded value

Inside the $4.5M to $5.2M range, near the top.

SOURCES OF FUNDS

Senior loan$3.6M
Seller note$580K
Buyer equity injection$920K
DSCR on $811K normalized···

Annual debt service $605K. Total sources $5.1M = purchase price.

QuickBooksTax returnsFinancial statementsBankingDeal documents

The bridge

Bring the credit analysis to life.
Grow deposits and reduce risk.

Most valuation and QoE work ends as a PDF that nobody opens again.
Chief preserves underwriting docs, then keeps watch after close.
Lenders can monitor the numbers as the business changes.

At underwriting

Historical financials
Normalized earnings
Valuation
Transaction structure
Buyer profile
Original risks
Approved DSCR
Supporting evidence

After close

Current financials
Actual cash flow
Updated DSCR
Material changes
Variance from original assumptions
Source evidence

As underwritten

Locked at approval

$811K

Normalized EBITDA

$4.8M

Business value

1.34x

DSCR

Relationship growth

The next opportunity may already be in the borrower data.

A lender often learns more about a business during acquisition underwriting than almost anyone else involved in the relationship. Chief preserves that intelligence and can help relationship teams see when the business changes in ways that may create a new banking need.

Borrower changePotential relationship opportunity

Revenue growthWorking-capital linePotential relationship signal
Accounts receivable growthLOC + treasury managementPotential relationship signal
Cash balances increasingDeposits + treasuryPotential relationship signal
Payroll growthPayroll + treasury servicesPotential relationship signal
Equipment investmentEquipment financePotential relationship signal
New locationCRE + equipment + treasuryPotential relationship signal
Another acquisitionAcquisition financingPotential relationship signal
Debt moved elsewhereRefinance / relationship recapturePotential relationship signal
Approaching maturityRefinance conversationPotential relationship signal

Chief can identify

What changed
Why the change may matter
Which original assumption changed
What type of banking need may be relevant
What evidence supports the signal

The banker decides

Whether the signal is meaningful
Whether to contact the borrower
Which product is appropriate
Whether to extend additional credit
What terms to offer

No automated solicitation. No automatic credit offers. No automatic servicing decisions.

From first loan to broader relationship

Give the BDO a reason to come back after closing.

The acquisition is often the beginning of the banking relationship, not the end. Chief can preserve the financial context from underwriting and surface operating changes that give a BDO a reason to reconnect with the borrower.

Acquisition loan
Living Credit Record
Borrower grows
Chief surfaces meaningful change
BDO reviews potential banking need
Relationship conversation

Before close

Clearer valuation
Clearer QoE
Fewer diligence gaps
Stronger acquisition conversation

After close

Know what was originally underwritten
See material business changes
Identify potential financing needs
Identify potential treasury / deposit opportunities
Prepare for the next borrower conversation

Structured from the start

The PDF is the deliverable.
The data is the asset.

Chief turns acquisition documents into structured Valuation and Quality of Earnings intelligence, delivered as a lender-ready PDF, structured data, or API.

Source data

Layer

CHIEF

Valuation + QoE intelligence

Structured fact

Revenue

$9.4M

One analysis, two outputs

PDF report

Lender-ready file for the credit memo

API / structured data

The same figures, machine-readable

Hover a document to trace a number back to where it came from.

Tap a document to trace a number back to where it came from.

No integration required to start

Start with the PDF workflow your team already uses. Connect structured data when and where it creates value.

Works with your process

Start with the credit file you've already built.

Chief can provide you with valuation and quality of earnings or work with existing reports.

No LOS replacement required.

No core write access required.

No automated credit decision.

No requirement to change valuation providers.

Bring your own valuation or QoE

Existing third-party valuation, QoE, credit memo, financial statements, projections, and transaction documents can be used to establish the original underwriting baseline.

Activate an Existing Loan

One borrower record, two jobs

See what changed, whether it creates risk or opportunity.

Better credit intelligence and more valuable borrower relationships come from the same baseline. Current financials are read against what was underwritten, so material changes surface with their source. Credit, servicing, and relationship decisions stay with the bank.

What Chief does not require

Nothing the bank runs today has to change.

No LOS replacement
No core write access
No automated credit decision
No automated servicing action
No requirement to replace existing valuation/QoE providers

QoE field guide

Trying to determine what a Quality of Earnings should actually include?

Read Chief's field guide for SBA lenders.

Read the guide →

Start small

Start with one file.

01
Send the acquisition file
- Financial statements
- Tax returns
- Purchase agreement
- Existing valuation/QoE if applicable
02
Chief builds the analysis
- Normalized earnings
- Valuation
- QoE
- Source-linked findings
03
You gets a baseline that meets SBA standards
- Analysis ready for underwriting
- Preserved for future comparison

Start a File Talk to Chief About Lender Onboarding

Valuation and Quality of Earnings for SBA acquisition lenders.

Every change-of-ownership file starts with the same questions.

Acquisition diligence just changed.

Know which add-backs actually hold up.

Does the purchase price hold up?

Bring the credit analysis to life. Grow deposits and reduce risk.

The next opportunity may already be in the borrower data.

Give the BDO a reason to come back after closing.

The PDF is the deliverable.The data is the asset.

Start with the credit file you've already built.

See what changed, whether it creates risk or opportunity.

Nothing the bank runs today has to change.

Start with one file.

Bring the credit analysis to life.

Bring the credit analysis to life.
Grow deposits and reduce risk.

The PDF is the deliverable.
The data is the asset.