Storm-chasing roofing contractor, 88% insurance-claim revenue, warranty tail unpriced
§ 01 · Observed
What was documented in diligence.
Revenue: $220,000 re-roofing/maintenance (12%), $1.64M storm/insurance (88%). Trailing 24 months covered two above-average storm years in the same market — neither year is representative of steady-state. Normalized maintenance run-rate estimated at $260,000 based on pre-storm-period actuals. Warranty exposure: $2.2M of installations over trailing 2 years with no reserve; estimated annual warranty claim liability $44,000–$88,000. Supplement revenue $310,000 — historical settlement rate 61%; restated to $189,000. DSCR on normalized steady-state SDE: 0.79×. No path to 1.20× at any feasible purchase price.
§ 02 · Outcome
What happened.
Buyer submitted LOI at 2.8× storm-year SDE. After storm normalization, warranty reserve, and supplement restatement, adjusted SDE declined 71%. DSCR on normalized SDE was 0.79×. Financing declined. Deal terminated.
§ 03 · Structural Pattern
How this deal fits the four-pillar framework.
Lower-band conditions on all four pillars: storm-event revenue presented as steady-state, warranty tail liability unquantified and unpriced, supplement income at target rather than settlement, and subcontractor crews with no entity-level agreements. The storm-chaser lower-band pattern: the business generates high revenue in above-average storm years, but the normalized maintenance run-rate cannot support the purchase price.
This is an anonymized composite drawn from observable structural patterns in the sample window. It is not a specific deal. The structural pattern, band placement, and outcome reflect commonly observed combinations; a future consented case study will replace this entry.
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