Confidential · Verified · Prepared for David
Every question a disciplined capital partner should ask this deal — answered, and paired with the actual system, document, or procedure standing behind the answer. Nothing here is hand-waved.
Illustrative planning document for discussion. Figures are estimates, not guarantees, forecasts, or investment advice.
This is a pre-emptive brief. It walks through the questions David is most likely to raise — on returns, protection, fairness, risk, demand, execution, exit, and control — and answers each one plainly, then names the concrete process behind it. The structure is deliberately simple: capital is protected first and paid first, the operator is rewarded only behind that, and every claim maps to a real system already built or specified.
Returns follow a clean waterfall: return of David's capital, then a 10% preferred return, then a 55% (David) / 45% (Steve) split of profits — with David paid ahead of any operator carry.
The first questions are the right ones: what do I make, what do I lose if it goes wrong, and how is my money actually protected. Each answer is backed by the model and the deployment discipline — not optimism.
Base case is roughly 2.8× on capital deployed (~33% IRR) over the hold. Verified is an acquisition platform: it buys trade firms, puts them on The Verified System, consolidates, and sells. You commit ~$10M of equity (called in gated waves as deals close) alongside ~$6M of acquisition debt / seller notes, and get back about ~$28M — your capital, a 10% preferred return, then your majority profit split. That comes off a ~$37M platform (9 firms, 57 trucks) at ~$4.5M EBITDA (~12%), valued sum-of-the-parts at a blended ~8.5× for a ~$47M enterprise value (~$40M equity). The waterfall protects you: capital back first, then a 10% pref, then profits split 55% you / 45% Steve (~$11.5M of carry to Steve, behind your ~$28M). You're paid first and yielded before Steve sees a dollar of carry — and every assumption is testable in the live model.
▸ In place: the driver-based interactive model (adjust deal count, price, margins, leverage, exit multiple live), funded through wave-gated capital calls so dollars follow proven integrations.
The downside floor is the organic-only outcome: Verified proves the sellable system and self-performs cash-flowing work, but never goes on the acquisition run — still worth roughly ~1.8× to you. You get there because you risk less than half a million to prove it (~$461k) before any scale capital moves (the full Stage-1 startup, ~$1.121M, also lands the first electrical acquisition). Equity is then called in gated waves as deals close, each released only against prior integrations proving out — so a stall caps how much is ever committed rather than exposing the full commitment. Spent capital is spent, but the fallback is the ~1.8× floor, not a loss on ~$10M. The ~$6M of acquisition debt amplifies both directions, which is why it's drawn against deals already integrating, and there is no forced sale. Hitting the base case exactly — 9 firms integrated, ~$37M platform, blended ~8.5× exit — is honestly about a one-in-three outcome, like any disciplined roll-up. But you're underwriting a structure that limits exposure (base case ~2.8× / ~33% IRR, floor ~1.8×), not a single make-or-break bet.
▸ In place: system-built-first, prove-it-for-~$461k, then wave-gated capital calls and a modeled organic-only floor in the interactive model.
A capital partner should interrogate the split and every dollar that moves before his return. The answer is a clean-carry waterfall with no skim: a market operator salary, back office reimbursed at cost, and operator upside that sits entirely behind your capital.
You keep the majority (55%), take a 10% preferred return, and are paid first. Steve's 45% carry sits entirely behind your capital and pref — earned only after you're made whole and yielded (~$11.5M of carry, plus salary, against your ~$28M). Three things justify it. First, the licenses enable the whole thing: your HoldCo can't legally self-perform electrical, KB-1 building, A general-engineering, plumbing, or HVAC work on its own — Steve's Icarus KB-1 and A licenses (Steve as QP) plus the division leads' QPs (Adrian on electric, a plumbing lead on plumbing) let your company do the work at all. Second, captive whole-project work — construction and commercial TI Steve surfaces flows to your own construction company (Verified Construction / Icarus), not a third party. Third, he is the operating engine — Steve runs Construction and Civil and stands up each division as it goes live. He carries execution; you carry priority.
▸ The process in place: the clean-carry waterfall — capital → 10% pref → 55/45, with operator carry strictly subordinate.
Steve's cash comp is staged, set at his existing market rate, and counted as a cost — he's not inflating salary on your dime. Today at McCully he earns $250k plus a 5% share of profit (~$110k last year) as Director of Construction; on Verified he rebuilds that same package. The base steps up on objective triggers in his Employment Agreement — a token $30k in the prove phase (while still drawing full McCully pay), $150k once the first firm is acquired, and $250k only when he's fully departed and full-time (matching his McCully base), scaling toward $350k (~$1.6M cumulative) — plus the same 5%-of-profit operator bonus he has at McCully. So his cash comp mirrors what he earns today; his real added reward is the carry (~$11.5M), which pays only after you're made whole and yielded — so he's incentivized to build value, not draw salary. Crucially, his salary and the bonus (normalized owner comp) and the back-office salaries all sit inside the ~12% margin: the ~$4.5M EBITDA you underwrite is after operator and overhead comp, so there's no missing-costs gap — that's honest EBITDA. Related-party items are all disclosed, arm's-length, at market: Sarah is a W-2 Ops Coordinator ($60k plus $10k per live division, salary-only, no equity, flagged and controller-reviewed), any McCully sub-work is struck at market and surfaced openly, and the office is an ordinary third-party lease.
▸ The process in place: the Staged Compensation Schedule (trigger-based, in the Employment Agreement) plus the transparency layer and Major-Decision consent on related-party deals — salary is a senior operating expense with a floor that never drops below the tier reached; carry sits behind your capital.
In a licensed trade roll-up the two real fragilities are the Qualifying Party and the operator. Both are addressed by structure — vesting equity, a replacement protocol, a second QP, and documented systems — not by hoping the key people never leave.
Adrian is bonded to the license by his own upside — a 5% vesting equity stake in the Electric division he forfeits if he walks or lets the license lapse. Arizona gives a ~60-day window to replace a QP before a license is at risk, and we develop a second QP early to remove single-person dependency. Arizona also ties one Qualifying Party to one licensed entity at a time, so you can't stack many shops under one person; we consolidate acquired shops under one licensed OpCo that our QP qualifies — a structural requirement we design around from day one, and clean licensing is exactly what a buyer scrutinizes at exit.
▸ The process in place: the QP-replacement protocol (60-day window + second-QP bench), equity vesting/forfeiture terms tying Adrian to the license, and consolidation-under-one-license with defined ROC compliance steps.
The business runs on documented systems, not Steve's memory — JobTread for project/job management, written SOPs, an AI-driven back office, and Sarah on operations — so the company is transferable and doesn't collapse around one person. Key-person insurance is available as a backstop.
▸ The process in place: the documented operating system (JobTread + SOPs + AI back office) and an optional key-person policy.
The wedge only works if the offer sells, the customers are reachable cheaply, and the utility delay doesn't choke cash. It's need-based demand against a huge installed base, marketed AI-first, and self-funded by deposits.
Because it's need-based, not aspirational. Scottsdale has ~67,816 pre-1990 homes (48.7% of the city). Older stock carries hazardous Federal Pacific / Zinsco panels that must be replaced for safety and code; the large 1980s cohort is simply out of breaker space for EV chargers, hot tubs, and additions — two distinct offers off one wedge against a ~$340M panel TAM.
▸ The process in place: the two-offer script (safety/capacity upgrade + "out of breaker space" 42-space swap) targeted to defined ZIP codes.
The return engine is disciplined buying. Every step — sourcing, vetting, financing, retention, and the multiple arbitrage itself — runs on a defined process with a hard gate you can walk away from.
Yes — it's the core return driver. Owner-operator shops trade at 2–3.5× SDE; professionalized platforms fetch 6–8.5×+. We buy cheap, aggregate into one branded platform, and sell dear — competent integration and clean scale, not operational heroics. Full comps and roll-up math sit in the Financial Model (§06–07) and the Exit section below.
Because we don't undersell what an owner gets. Joining Verified delivers roughly ~$250k+/yr of real, recurring value — the AI + JobTread back office ($30–50k), a full back office run for them ($90–140k), professional estimating ($80k), marketing and lead-gen ($40–70k), group purchasing (2–5% off materials), and recruiting/retention ($20–30k) — plus a salary, plus a real exit. That's close to a shop's entire annual profit, delivered every year on top of the sale price: they cash out, keep earning, and finally run on a system. They don't walk with the customers because the value is the system, not the shop — customers convert onto Verified's service agreements, branding, and back office during integration, with the owner a paid participant, not a competitor.
▸ The process in place: The Verified System (AI back office + JobTread + standardized field kit + playbooks + the Verified estimation process) delivered as the owner value stack, with a full product tour available as the demo.
Exactly right — which is why estimating is a pillar of The Verified System, not an afterthought. Misprice the work and margin evaporates. A dedicated field estimator quotes the work (~$80k/yr, brought on early), Steve estimates up front himself, and as each firm is acquired Verified meshes its standardized estimation process into theirs during integration. That protects margin on every job and becomes a seller value-add — owners have to know the system to use it, which is part of why the platform, not any single shop, holds the value.
▸ The process in place: the Verified estimation process — a standardized, database-driven quoting method inside The Verified System, run by a field estimator and meshed into each acquired shop on integration.
The sharpest question in any trades roll-up: you can buy shops, but who does the work? Our answer is that labor isn't a gap we hope to fill — it's a system we built to manufacture, and it's the moat a national buyer pays up for.
This is the thesis, not the gap. The Verified Training Exam ladder manufactures labor: a helper is trained up on real, paying jobs alongside a veteran, passes the Verified exam, earns the "Verified" designation, then runs his own truck and trains the next helper. Every acquired veteran becomes a mentor, so each acquisition expands training capacity and the pipeline compounds. In an industry short of skilled people, a self-renewing engine that turns helpers into truck-running Verified techs staffs both organic growth and every deal — and it's the durable, hard-to-copy asset a consolidator pays a premium for.
▸ The process in place: the Verified Training Exam ladder — trained up → pass the exam → "Verified" → run a truck → train the next helper, so capacity renews itself.
A capital partner wants to know what he owns at the end, who buys it and when, and what happens if that market is soft. The answer is a complete building firm you can sell three different ways — and there is never a forced sale.
A consolidated, self-performing trades platform — 9 acquired firms on The Verified System, rolled into licensed divisions (Electric, Plumbing, HVAC, Civil, Construction), 57 trucks doing ~$37M of revenue at ~$4.5M EBITDA, valued sum-of-the-parts at a blended ~8.5× for a ~$47M enterprise value. Because each division stands on its own books and license, you get three real options at any point — no forced sale: sell the whole platform to one consolidator; carve it by division and sell Electric, Plumbing, HVAC, Construction, or Civil to specialist buyers; or keep operating and hold for cash flow. You can even do it in stages — sell one division, hold the rest. You're never dependent on a single buyer or window.
▸ In place: division-level books, licensing, and P&L from day one plus an exit-readiness checklist (clean books, second QP, documented systems) — so the firm sells whole, carves by division, or holds, with no restructuring at exit.
Because at platform scale with a recurring-service book, a buyer still decomposes the pieces — but the pieces command more than an unscaled shop. Recurring, ticket-driven service divisions (Electric, Plumbing, HVAC) at scale trade toward the top of 5–7×+; lumpier Construction and Civil at 3–4×. Weighted by our mix at ~$37M of revenue, that sums to a blended ~8.5× — the number we underwrite to. The arbitrage between the ~4× we buy at and the ~8.5× we sell at is the core return driver, not operational heroics; the unscaled, organic-only firm blends closer to ~5× (the floor case). The single biggest lever is recurring revenue: service and maintenance agreements — panel/safety inspections, HVAC service plans, plumbing maintenance — are designed in from Year 1, not bolted on before a sale, and push a service division toward the top of its range. Every acquired shop's customer base converts onto agreements during integration, so the recurring book compounds with the roll-up, and GC and Civil sit in separate entities for frictionless carve-out.
▸ In place: sum-of-the-parts valuation (service vs. project multiples by division), documented ~4×-in / ~8.5×-out arbitrage, and the service-agreement program tracked as contracted recurring revenue from Year 1.
Passive capital still needs control where it counts and a clear line of sight into the money. David holds consent rights on the decisions that matter and independent visibility into the books — trust, but verify.
You hold consent rights on Major Decisions — acquisitions, any debt or spend above ~$100k, the annual budget, a sale, admitting partners or issuing equity, related-party deals, and new lines of business. Deadlocks split by domain (operator decides operations, capital decides capital), and Steve can be removed for cause only. Passive on day-to-day, decisive on what protects your capital. Full list in the Governance one-pager.
Sarah keeps the books in QBO; your Besins Group controller gets view access plus a monthly and quarterly review, and you receive monthly financials directly. Built so your own team verifies independently, not just receives a summary. Trust, but verify.
Electrical is the entry point, not the ceiling. The firm is designed to self-perform the entire job — a KB-1 general contractor plus A engineering plus the three excluded trades — rolled out one division at a time.
Electrical is the pilot. A KB-1 GC scope is carved out of exactly electrical, plumbing, and HVAC — so a builder who adds those three trades plus A general-engineering can self-perform the whole job instead of subbing it out. That's the firm: five licensed divisions under one HoldCo, The Verified Companies, LLC — Verified Construction (KB-1 GC; Steve QP) alongside the Electric pilot (Adrian QP) in Year 1, then Verified Plumbing (Year 2), Verified HVAC (Year 3), and Verified Civil (A engineering; Steve QP, ~Year 4). Each division stacks work onto the next — plumbing's sewer scoping feeds Civil's dig-and-replace — so the firm captures margin across the whole project.
▸ The process in place: the division-rollout roadmap — Construction + Electric (Yr 1) → Plumbing (Yr 2) → HVAC (Yr 3) → Civil (~Yr 4), gated one at a time.