Formation Budget and Acquisition Economics

The financial objective

Standard Loop intends to build substantial commercial value and meaningful personal wealth for its founder and operators while improving the institutions it acquires.

The model needs to support three things simultaneously:

A properly paid leadership team with a healthy working environment.

Financially sound acquisitions that can service their obligations.

A durable ownership position for the people who build the company.

Our immediate financing problem is formation capital and the first acquisition. Our longer-term question is whether the operating approach can repeat.

A. Twenty-four-month formation budget

The preliminary budget is $2.8 million.

This is a planning budget. It does not assume that every role begins full time or on day one.

The budget includes founder pay, specialist operating support and enough reserve to avoid making desperate decisions because a transaction takes longer than planned.

The reserve should not be treated as discretionary spending.

Acquisition purchase capital, transaction debt and the separately funded fellowship are excluded.

B. How to finance formation

The working target is $2.8 million, potentially divided into an initial $1.5 million commitment and a later $1.3 million commitment tied to agreed conditions.

The smaller initial closing would allow the organization to begin sourcing and qualification. A staged arrangement must still ensure enough runway and clear terms for subsequent capital.

A single lead partner or small aligned group may be preferable to numerous tiny checks if it provides better governance, follow-on capacity and a clear path to acquisition financing.

The parent-equity valuation has not been set. Founder ownership and investor rights must be negotiated before securities are offered.

First close and second close, proposed: $1.5 million now, $1.3 million when a signed letter of intent on a buy-box school, a lender indication on SBA terms, an identified operating leader, and counsel engaged on Title IV and state transition are all in place. Instrument and terms, and which entity first-check investors buy into, are still to be set with counsel.

C. School one, financed with SBA

Our first acquisition is a single profitable allied-health school, not a school group. Larger groups come later, with a co-investor, and only after school one works. This is Path A. Path B is described below.

Buy box, illustrative: purchase price about $2 million to $4 million; allied health first (certified nursing assistant, medical assistant, dental assistant; licensed practical nursing only after separate review); cash flow that still covers debt service at 1.25 times after a 20 percent drop; lower federal-aid share preferred for schools one and two; owner ready to transition; a leader willing to stay or step up.

At SBA terms of 10.5 percent over 10 years, assumed here, debt service is about $291,000 a year on a $1.8 million loan, about $364,000 on $2.25 million, and about $583,000 on $3.6 million. To hold 1.25 times coverage after a 20 percent drop, a school needs EBITDA of about $455,000 for a $2 million purchase, about $569,000 for a $2.5 million purchase, and about $911,000 for a $4 million purchase. That is a purchase price of about 4.4 times EBITDA in each case. Paying materially more than that, without more deal equity, fails the downside test.

School one, worked example at $2.5 million, all figures estimates: purchase $2.5 million; SBA 7(a) loan $2.25 million (90 percent); equity injection $250,000, of which a seller standby note may cover up to half under SBA rules. Sources and uses, including a working-capital reserve of about $250,000, a Title IV letter of credit reserve of $75,000 to $250,000, and closing, SBA fee, quality of earnings, and counsel of about $150,000, total about $2.98 million to $3.15 million, funded by the $2.25 million loan, a $100,000 to $125,000 seller standby note, and about $0.65 million to $0.85 million of deal equity. Deal equity is raised per deal and is separate from formation capital.

SBA loans require a personal guarantee from anyone owning 20 percent or more. Jason will give one. We size every deal so the downside case covers debt service without it being called.

Later, Path B: a $20 million group at about 5 times EBITDA needs a co-investor for about $13 million of equity. We would do this only after school one works. The earlier $20 million group example has been moved here; it is not the first acquisition.

D. Five-year scenarios

These cases are illustrative, not probability-weighted forecasts, and they assume the pace and leadership constraints in Tab 7. Founder pay is counted separately below in Section F. Sponsor equity figures are paper values at an assumed exit multiple, after investor capital is returned, not cash in hand. The model assumes a sponsor share of 25 percent of the residual after investor capital, with Jason owning 70 percent of the sponsor. Those terms are assumed here and are to be negotiated, especially with friendly first-check investors.

Year one, any case: school one is closing or just closed. Sponsor equity is about $0. Gross founder pay is about $150,000 on the proposed milestone basis in Section F. Year one proves leader, coverage, and outcomes, not wealth.

Year three, bear: one school, group EBITDA about $450,000, exit multiple 4.5 times, net debt about $1.9 million. Sponsor equity for Jason: about $0. Cumulative gross pay: about $650,000.

Year three, base: one to two schools, group EBITDA about $1 million, exit multiple 6 times, net debt about $3.2 million. Sponsor equity for Jason: about $0 after investor capital is returned. Cumulative gross pay: about $650,000.

Year three, bull: three schools, group EBITDA about $2 million, exit multiple 6.5 times, net debt about $4.5 million. Sponsor equity for Jason: about $0.6 million, paper only. Cumulative gross pay: about $650,000.

Year five, bear: one school, group EBITDA about $450,000, exit multiple 4.5 times, net debt about $1.6 million. Sponsor equity for Jason: about $0. Cumulative gross pay: about $1.15 million.

Year five, base: two schools, group EBITDA about $1.4 million, exit multiple 6.5 times, net debt about $3.5 million. Sponsor equity for Jason: about $0.24 million, paper only. Cumulative gross pay: about $1.15 million. Two small schools, run well, do not by themselves produce significant personal wealth on these terms.

Year five, bull: four schools, group EBITDA about $3.2 million, exit multiple 7 times, net debt about $6 million. Sponsor equity for Jason: about $1.9 million, paper only. Cumulative gross pay: about $1.15 million.

Year five, bull plus: five to six schools, or a Path B group added only after school one works, group EBITDA about $5 million, exit multiple 7 times, net debt about $8 million. Sponsor equity for Jason: about $3.5 million, paper only. Cumulative gross pay: about $1.15 million.

What has to be true for significant wealth: group EBITDA of $3 million to $5 million, which means four to six schools or a later larger group; buying at about 4.4 times EBITDA or better; EBITDA growth from operations, not from assumed AI savings; and sponsor terms negotiated deliberately, since a larger sponsor share moves these figures more than a higher exit multiple. Distributions of free cash after debt service and reserves, if any, are real cash before an exit, but every dollar distributed is a dollar not funding the next school.

The earlier five-year table, with group EBITDA of $20 million to $43 million and 10 to 18 campuses, has been replaced. Those figures described a much larger, later-stage group, not the realistic path from school one.

Note, October 2026 revision: the totals below reflect the earlier large-group model. Under the revised school-one model, cumulative capital for two schools by year five is materially lower, and the fellowship figure is to be set, not $2.0 million. See the shared model sheet when it is built.

F. How Jason earns along the way

Proposed, subject to board approval: gross annual compensation of $150,000 until school one closes, then $250,000, with increases approved by the board. On that basis, cumulative gross pay is about $150,000 in year one, about $650,000 by year three, and about $1.15 million by year five. These are estimates, not a promise.

Pay is income, not wealth. Wealth in this model comes from sponsor equity value, and only after investor capital is returned, as shown in Section D. Founder equity value is largely illiquid before a sale, recapitalization, or permitted distribution. Personal taxes, transaction expenses, and actual savings materially affect net worth.

Any increase should be approved through governance, supported by the budget, and reflected in reported earnings.

G. What must happen before relying on this model

We need verified acquisition opportunities, actual seller financials, a normalized earnings methodology, lender indications, education-regulatory diligence, operator compensation plans and negotiated sponsor and investor economics.

The most important investor return calculation is the distribution waterfall for a real first acquisition.

Until we have that, the five-year model shows what the strategy might produce under stated assumptions. It does not show what an investor has already earned or what Jason is guaranteed to own.

The decision rule

We want large financial outcomes.

We will pursue them through sound acquisitions, experienced management, better outcomes and disciplined capital.

We should not require every deal to become extraordinary for the organization to survive.

Build something that works before asking it to compound.

Discussion material only. Financing terms, entity structure, and financial projections remain preliminary. This is not an offer to sell securities.