Work record / Capital / HighTide Desk Tools

Four tools I built at the HighTide diligence desk

Every target that passes HighTide's screen lands on my desk before anyone puts a number on it. I built four tools so that each one is read against the same standard and not the one its broker picked.

The seat

I hold the Operations and Integration Lead seat at HighTide Capital Group, with Common Ground as the flagship, and I have since 2025. The platform has no closed deal yet, so most of that seat is the diligence desk, and these four tools are what I built to run it.

What I was brought in to decide

HighTide Capital Group acquires trade-services companies in Arizona that are run by their owners, and keeps them. We have not yet closed a deal, so much of my job is the diligence desk. A target that passes the screen has to cross it before it earns a number.

Each target arrives in a broker's package, and each package defines its own normal. One painting contractor's sheets treated a fifth of revenue as a painter's normal earnings. In a landscaping contractor's recast, the owner's retirement plan contributions were counted as earnings. A small painter's listing took a strong partial year and annualized it. Nothing here was false. But the package was the only yardstick for the package, so the same few problems turned up in week three and not on day one.

What we did

• I built a base-rate tracker across trades, drawn from the desk's own screened deals. It holds nine trade businesses with figures. They span five trades, namely painting, landscaping and plumbing, then remodel and construction management, and pool construction and service. For three of the nine I went all the way to filed tax returns. The tracker has one row per metric, trade and size band. A small business is under $1 million of revenue, a mid-size one runs to $3 million, and a large one is above that. Each band shows the count and the basis, and no seller, broker or town appears. A band changes only on filed returns.
• I wrote a liability-search checklist for the NDA stage, so it runs before any package figure enters a model. The items: whether state and local taxes were remitted and exemptions supported; whether federal returns were really filed, confirmed by transcripts; liens and titles; claims, plus any complaints about licensing; which person qualifies the contractor's license; how the shareholder list squares with the returns; and obligations tied to premises and payroll. I mark each item as binary or pricing before any deal reaches the desk. When a search comes back clean, I log the source and date, so nobody reads a blank as a pass.
• The checklist comes first because of the first painting contractor. Its books were clean, yet the income statements had no line at all for Arizona's transaction privilege tax. New-construction painting is taxed as contracting. A subcontractor owes nothing only when it holds a certificate from each builder showing that the builder pays. The file had none. A company that complies and a company that does not produce identical financial statements.
• I built a single quality-of-earnings bridge that tests the same lines the same way on every deal. It starts with the filed return and weights three filed years, the latest heaviest. I reconcile owners' pay owner by owner to the return. Retirement contributions count only with a letter from the seller's accountant. Income that does not convey comes out, and related-party rent is normalized. The owner's seat is replaced at its loaded market cost, and the bridge adds the second seat for the fully staffed case.
• I wrote an offer-structure method that prices whatever might not transfer as terms the seller can choose. One path is cash, paid for certainty. Beside it is a partnership path: a lower fixed price, plus a contingent amount that the seller earns only if the concentrated customers stay. The test is a revenue-by-customer schedule the seller signs. The downside is symmetric, and losses the buyer causes are carved out. The holdback sits in cash escrow and the key foreman signs a retention agreement. Price comes up last.
• The order is fixed. Base rates come first, then liability searches, then the bridge, and the offer structure last. Every deal ends with an update to the tracker.

Results

• Small project businesses present about a third of their revenue as earnings, since the owner's own labor is inside it. The mid-size and large companies cluster near a fifth.
• The businesses I took to filed returns started at about a fifth or more of revenue. I paid the owner's seat at market and held out the add-backs nobody could support, and then they fell to somewhere between about a twentieth and an eighth. The landscaping contractor fell the furthest, because of retirement contributions added back.
• The asks ran between about one and a half and a little over three times presented earnings. Two painting targets I rebuilt from filed returns asked about 2.3 times what was presented. Against the earnings that survived the rebuild, that was near 3 times. It is a full price on a smaller number.
• Both painting targets leaned on one customer group for two thirds or more of revenue or contracted work. Each also had a year when revenue fell by almost a quarter to two fifths. The owner who was selling qualified the license every single time. And each package left out something that goes with the company.
• The deal-ending questions now reach the seller's accountant in the week of the NDA and not in week three. A finding on customer concentration has become a term a seller can choose, where before it was only grounds to cut the price.

The lesson

Build the reference class once, so every target is read against the same standard and not the one its own broker chose.

Public record

• HighTide Capital Group

Firm record

Common Ground keeps its own account of this engagement: HighTide Desk Tools on the Common Ground wiki.

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