Methodology
How SearchLens evaluates deals and generates recommendations
SearchLens is a pre-LOI triage tool. It is designed to help searchers quickly identify which deals warrant deeper diligence — not to replace that diligence.
What We Evaluate
Every deal is assessed across five dimensions. Each contributes to the final recommendation.
EBITDA Scale
The primary signal in any lower middle market deal. We assess whether the business generates sufficient normalized EBITDA to support an acquisition — accounting for debt service, a market-rate operator salary, and an adequate return profile for the searcher and their sponsors.
EBITDA Trend
A single year of EBITDA tells you where the business is. The trend tells you where it’s going. We analyze the stability and direction of normalized EBITDA over the available period, flagging businesses where earnings have deteriorated or are highly volatile.
Revenue Trend
Top-line momentum matters. We evaluate recent revenue growth or decline as a leading indicator of business health, and note where revenue trends diverge from EBITDA trends — which often signals margin pressure or one-time items.
Margin Quality
EBITDA margin tells you how efficiently the business converts revenue to earnings. We assess whether the margin profile is consistent with a sustainable, acquirable business in the lower middle market — and flag cases where thin margins create fragility.
Add-Back Dependency
Add-backs can legitimately improve normalized EBITDA — but only when they are verifiable and non-recurring. We categorize every add-back by its source and verifiability, and assess the degree to which the normalized EBITDA depends on adjustments that have not yet been independently confirmed.
How the Recommendation Is Made
After evaluating all five dimensions, SearchLens generates one of three recommendations. These are starting points for your judgment — not a substitute for it.
Proceed to IOI
The business clears our scale threshold and the overall risk profile is clean. The financials support proceeding to an indication of interest, subject to sponsor alignment and your own qualitative assessment.
Request More Info
The business has merit but one or more dimensions require clarification before a confident recommendation is possible. This outcome includes specific follow-up questions to guide your next conversation with the broker or seller.
Pass
The financials do not support an acquisition at standard lower middle market terms. Either the earnings base is insufficient, the risk profile is too elevated, or both.
Valuation Range
We calculate an indicative valuation range using standard lower middle market EBITDA multiples. Where unverified add-backs are present, we show a separate upside range clearly labeled as dependent on confirmation of those adjustments. These ranges are directional — not a substitute for a formal valuation.
How We Handle CIM-Only Deals
When only a CIM is available — without supporting financial files — we apply more conservative assumptions throughout. Seller-proposed add-backs are flagged for verification rather than applied, and the recommendation reflects the limits of the available data. SearchLens will always tell you what it knows and what it doesn't.
What SearchLens Does Not Do
- SearchLens does not replace quality of earnings analysis or full financial diligence.
- SearchLens does not evaluate management teams, customer concentration, or operational risks beyond what appears in uploaded documents.
- SearchLens does not provide legal, tax, or investment advice.
- Recommendations are generated by a rules-based engine calibrated to lower middle market search fund benchmarks. They are a starting point for your judgment, not a substitute for it.
Data Sources
SearchLens accepts CIMs, QuickBooks P&L exports, tax returns (Form 1120), balance sheets, and seller add-back schedules. When multiple source documents are available, we cross-reference them to improve accuracy and flag discrepancies.
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