Project Sentinel, AI Diligence Brief delivered
Target: Sentinel Fire & Safety, Inc., commercial fire & life-safety inspection, testing and maintenance (ITM). TTM revenue $6.21M (+7.4% YoY). Adjusted EBITDA $1.42M (reported $1.08M).
Verdict: Attractive recurring base, but three findings materially change the risk picture and one stated fact is contradicted by the CIM's own customer detail. Proceed, with the items below confirmed before LOI.
Every claim below is traced to one of these source documents, and figures are reconciled across them, exactly as a real run reads a full data room.
No findings match this filter, .
Verified claims
Source: Sentinel_Financial_Statements.pdf · page 2 ✓ verified against source
“Total revenue for the trailing twelve months was $6.21M, up from $5.78M and $5.34M in the two prior years.”
Source: Project_Sentinel_CIM.pdf · page 9 ✓ verified against source
“The top ten accounts together represent approximately 61% of revenue.”
Contradictions flagged
Two passages in the same document that cannot both be true. The brief shows you both, verbatim, and leaves the judgment to you.
Page 8 states no customer exceeds 15% of revenue. Page 9's own figures put the top account (Northgate Property Group) at $1,366,000 against $6.21M total, that is 22.0%. The page 8 statement is false on the CIM's own numbers. Losing Northgate would remove roughly a fifth of revenue and a larger share of EBITDA. Treat concentration as a primary risk: verify Northgate's contract term, assignability on change of control, tenure, and relationship owner.
Page 7 presents 78% as agreement-backed recurring revenue. Page 22 reveals that one-time repair and call-out work is counted as “recurring” whenever it is performed for a contracted account. The two passages are inconsistent, true contractually-recurring revenue is lower, possibly materially. Request a revenue cut separating fixed inspection billings from variable repair/call-out billings. This affects the multiple a buyer should pay.
Financial tie-out
A quality-of-earnings first pass: the same figures tied out across the CIM, the financials, and the tax return, and every EBITDA add-back judged on whether it survives a sale. The deltas and the defensible EBITDA are computed, never asserted.
The seller's $1.42M adjusted EBITDA rests $90K on add-backs that may not survive a sale, and TTM revenue is stated $260K higher in the CIM than on the tax return.
“Total revenue for the trailing twelve months was $6.21M.”
“Gross receipts or sales: $5,950,000.”
| $210,000 |
Owner compensation above market likely
A genuine above-market owner salary normalizes to a hired manager's compensation.
|
| $40,000 |
Owner personal vehicle and travel likely
Standard owner personal expenses, confirmable from the general ledger.
|
| $65,000 |
Legal settlement questionable
Survives only if documented as genuinely one-time and not part of a pattern of disputes.
|
| $25,000 |
Projected run-rate from new contracts unlikely
Not yet realized; a buyer pays for trailing performance, not projections.
|
| Seller's adjusted EBITDA (as presented) | $1.42M |
| Less: add-backs that may not survive a sale | ($90,000) |
| Defensible adjusted EBITDA | $1.33M |
| Implied EBITDA before any add-backs | $1.08M |
The seller presents $1.42M. After haircutting the add-backs that are not clearly defensible, $1.33M is what holds up, a gap that moves the price at any multiple.
Management-call cross-check
What management said on the call, checked against what the documents actually support. Both the spoken statement and the documentary basis are verified to source, so neither side of the comparison can be fabricated.
Two of management's call statements are contradicted by the documents, and one is unsupported.
Risks & items needing documentary support
This is more serious than ordinary owner-dependency. If state law requires a qualified license holder to legally perform fire-protection work, the founder's retirement could leave the business unable to operate until a qualified replacement is licensed. Confirm the state requirement and whether any employee qualifies, or can qualify, to hold the license post-close. Potential deal-breaker that the CIM frames as routine.
Source: Project_Sentinel_CIM.pdf · page 14 ✓ verified against source
“The business is owned and operated by its founder, who holds the state-issued fire protection contractor license under which all Company work is performed.”
Auto-renewing agreements are the thesis, but their value depends on surviving a change of control. With the top account at 22% of revenue, a non-assignment clause in the Northgate contract specifically would be major. The seller has not reviewed assignment provisions. Review the top-ten contracts' assignment clauses before LOI.
Source: Project_Sentinel_CIM.pdf · page 19 ✓ verified against source
“The seller has not undertaken a review of change-of-control or assignment provisions across the contract base.”
$340K of add-backs is 24% of adjusted EBITDA. Owner compensation and charitable items are defensible. The $65K “one-time legal settlement” must be documented as genuinely non-recurring, and the underlying matter understood. Request support for each line.
Source: Sentinel_Financial_Statements.pdf · page 4 ✓ verified against source
“Reported EBITDA of $1.08M is adjusted to $1.42M after owner add-backs, including owner's compensation above market ($210,000), a one-time legal settlement ($65,000), personal vehicle and travel expenses ($41,000), and discretionary charitable contributions ($24,000).”
Inspection schedules and compliance records are the operational backbone. An untested export from a 2009 proprietary system is integration and continuity risk. Test data export during diligence, not after close.
Source: Project_Sentinel_CIM.pdf · page 16 ✓ verified against source
“the seller notes that data export from this system has not been tested.”
What to confirm before LOI
- Revenue cut: fixed inspection vs variable repair/call-out billings.
- Northgate contract: term, assignability on change of control, tenure, owner.
- State licensing requirement + a qualified in-house successor.
- Documentary support for each add-back, especially the $65K legal settlement.
- Assignment clauses across the top-ten contracts.
- Tested data export from the legacy operating system.
- 3-year revenue-by-customer and staff turnover.
- 10-year litigation history.
Verification log, discarded before delivery
The model generated these while drafting. Each was checked against the source, could not be tied to a verbatim passage, and was removed before you saw the brief. This is the part most AI diligence tools never show you.
Investment-committee memo
The decision capstone, drafted from the verified findings and the tie-out above. Every figure traces to a cited number in this brief, and it is candid that the first pass still wants a formal quality-of-earnings review.
Pursue with conditions: a durable, compliance-mandated recurring base at a fair multiple, contingent on resolving customer concentration, the licensing successor, and the revenue and add-back questions before LOI.
Proceed to a conditional LOI. The inspection base is recurring and defensible, but three findings move the price: a single customer at ~22% of revenue, a state-licensing dependency with no named successor, and a $260K revenue gap between the CIM and the tax return. Anchor valuation to the defensible $1.33M EBITDA, not the seller's $1.42M.
A 30-year fire-and-safety inspection business with contract-driven, compliance-mandated revenue. The work is non-discretionary for customers, which supports renewal and pricing power.
TTM revenue is $6.21M in the CIM but $5.95M on the federal return, a $260K gap to reconcile before any multiple. Reported EBITDA $1.08M; seller-adjusted $1.42M; defensible $1.33M after haircutting a questionable $65K legal-settlement add-back and a $25K unrealized run-rate.
Customer concentration (Northgate ~22%, contradicting the CIM's 'no customer over 15%'). Licensing continuity (state license held by the owner, no qualified in-house successor). A 2009 legacy operating system whose data export is untested.
Reconcile the revenue gap; obtain Northgate's term and change-of-control terms; identify or hire a licensed successor; document the $65K settlement as non-recurring; test the data export; and commission a quality-of-earnings review. This brief is a first pass, not a formal QoE opinion.
A brief like this can be shared with a partner, lender, or your IC as a private, read-only link, citations still clickable, that expires and can be revoked at any time.
Want this run on your own deal?
Upload a CIM and get a source-cited diligence brief, every claim verified against your documents, the unverifiable ones discarded.
Not ready for a monthly plan? Run a single CIM for $99, credited to your first month →
