Elliott Holland: Why Pre-LOI Numbers Are Plus-or-Minus 40 Percent

The Setup Elliott Holland did not start as a diligence guy. He started as a buyer. While at Harvard Business School he co-founded Ellsworth Partners with a mentor, a traditional-style private equity vehicle that went after lower middle market targets. Through Ellsworth he closed on an automotive parts business, a tow truck operation, and a clinical trials company. Three very different industries, three different diligence experiences, one consistent lesson: the numbers a seller hands you before the LOI are a sketch, not a photograph. After Ellsworth, Elliott moved downmarket with Spartan Capital, hunting deals in the $500K to $2M enterprise value band. That is the range where SBA buyers, self-funded searchers, and first-time operators live. It is also the range where traditional Big 4 Quality of Earnings providers will not quote you, or will quote you a fee that eats your entire closing budget. That gap is what Guardian Due Diligence was built to fill. The Deal Guardian is not an acquisition. It is a services business Elliott founded in 2016 after he kept watching friends and peers close on small companies using nothing but the seller's QuickBooks export and a handshake. The unit economics are straightforward: deliver QoE-style financial diligence priced for a deal where the buyer is writing a $200K equity check, not a $20M one. By 2021 the firm was running roughly 30 deals a year. That is not a staffing-heavy roll-up. It is a focused practice where Elliott's own reps as a buyer are the product. Operating Moves - Priced diligence for sub-$2M deals, a segment Big 4 and regional accounting firms effectively ignore. - Positioned around a single insight buyers need before they wire funds: pre-LOI information is plus or minus 40 percent. For every dollar the seller shows, the truth is somewhere between 60 cents and $1.40. - Built the offering around the reality that sellers of small businesses often will not share granular detail until a QoE is actually in motion. The report is the trust mechanism, not just the deliverable. - Used his own buyer-side scar tissue (three closed deals across three industries) as the credibility anchor. Clients are not hiring an accountant, they are hiring someone who has sat in their chair. Operating Lessons - Treat the CIM and broker numbers as a range, not a point estimate. If a deal only works at the midpoint, it does not work. Stress test at minus 40 percent. - Reps matter more than pedigree. Elliott's point: "to get good, you need reps." Your second deal will be better than your first because you will know which questions to ask on day one of diligence. - Pre-LOI is theory. Post-LOI is practice. Do not spend three months negotiating price against numbers you have not validated. Get to LOI, then do the real work. - Seller hesitation to share data post-LOI is not a red flag by itself. It is a trust gap. Use the diligence process to build that trust, not to bulldoze it....