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Case History: Business &

Viability Analysis

Industrial Services

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A comprehensive Business & Viability Analysis can give business owners and lenders insight into the performance and health of a business, corrective change measures, and the predictive impact from the changes.


Situated in Northwest Atlanta is a family-owned commercial and industrial HVAC business generating $600K in revenue through offering service/repairs, dehumidification, and energy solutions to the greater Atlanta area. Purchased from the original owner using an SBA loan, in addition to intense competition in the metropolitan area, the new owner was inadequately informed of the prior owner's challenges, which lead to an inflated price of the business due to booked Accounts Receivable that were not actual contracts at the time of the sale. Whereas sufficient cash flow was reported at the time of the transaction, in fact, less than 20% of the reported A/R materialized. Upon completion of the transaction, recourse from the new owner was limited as the former owner’s estate would have been charged. Realizing the complexity and possible outcome of the legal path was dire, the new owner decided to forge ahead and make the business work. When note payments started coming in, however, cash flow tightened causing the owner to test pivoting the strategy to converting into a service-based project management organization under a variable cost model, an equity/profit share model with incentive-based compensation plans to lower operating costs, and utilizing sub-contractors. The owner also sold his house and moved his family to pay down the SBA loan.  


Fortis Business Advisors was referred to HVAC Company with the goal of a comprehensive business and viability analysis. The business was in workout with the lender, and the owner wanted to make sure that the situation did not get worse in the event the business could not recover. Fortis also leveraged relationships with auctioneers specializing in small businesses, particularly with industrial equipment, and a distressed loan advisor specializing in SBA loan settlements. Through the comprehensive analysis, a series of reporting challenges were identified and key performance indicators measured that highlighted adjustments that needed to be made to the company in order for it to remain viable and return to regular debt servicing.


To establish a baseline and isolate variances and trends, comparative financials were measured, including current and previous Balance Sheets and Income Statements both annually and over a rolling 12-months.


A current vs. optimal vs. average Income Statement was tested detailing a potential return based on prior efficiencies.


Comparative Key Performance Metrics, Liquidity and Solvency ratios, and Cash Cycles were measured to isolate trends.  

A Potential Business Failure Analysis was executed to measure the level of distress.

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