Deal Analyzer

Underwrite an acquisition end to end. Every field recalculates the model instantly — coverage, returns, downside and exit.

Analyzing…

Cash required at close

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Down payment + costs + working capital

Debt service coverage

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Lenders typically require 1.25×

Cash-on-cash · year 1

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Return on the cash you put in

Buyer cash flow · year 1

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After debt, capex and tax

Purchase multiple

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Against the industry band

Deal inputs

Live

Deal name

Industry

The business

Asking / offer price

Annual revenue

SDE / owner earnings

SDE is net profit plus the owner's salary, perks and one-time costs — what one working owner actually earns.

Buyer economics

Owner / manager salary

Working capital

Maintenance capex2.0%

Share of revenue reinvested each year to keep the business running.

Blended tax rate25%

Deal structure

Buyer cash down15%

Seller note10%

Closing costs3.5%

Bank / SBA rate

Bank term

Seller note rate

Seller note term

Forward assumptions

Annual revenue growth3%

Hold period

Exit multiple

Risk profile

Largest customer18%

Recurring revenue40%

Owner dependence35%

Years in business

Revenue trend

Sources & uses

Buyer cash down—

Bank / SBA loan—

Seller note—

Closing costs—

Working capital—

Cash out of pocket—

Where the earnings go

Year 1

Seller's discretionary earnings—

Less owner / manager salary—

Less maintenance capex—

Less annual debt service—

Less income tax—

Cash to the buyer—

Price vs the market

Industry range

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Fair value midpoint

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This price vs midpoint

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Revenue multiple

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Annual debt service

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Revenue cushion

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Revenue can fall this far before the business stops covering its debt.

Payback on your cash

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Time to recover the cash you invested.

Projection & debt paydown

Year	Revenue	SDE	Debt service	DSCR	Cash to buyer	Cumulative	Debt balance

Exit & total return

Sale value at exit

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Net proceeds after debt

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Equity IRR

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Multiple on invested cash

—

Score breakdown

Weighted 0–100

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How to analyze a business acquisition

Buying a business is not a valuation exercise — it is a cash flow exercise. A fair price you cannot finance is a bad deal, and a high price with the right structure can still work. This analyzer models both sides at once: what the business is worth, and whether the deal as structured actually pays you.

1. Start with SDE, not revenue

Seller's Discretionary Earnings (SDE) is net profit plus the current owner's salary, personal expenses run through the business, interest, depreciation, and any genuine one-time costs. It represents the total financial benefit to a single working owner. Small businesses are priced as a multiple of SDE; larger ones move to EBITDA, which does not add back an owner's salary.

SDE = Net profit + Owner salary + Owner perks + Interest + Depreciation + One-time costs

2. Check that the deal services its own debt

The Debt Service Coverage Ratio (DSCR) is the single number a lender cares about most. It compares cash available after you replace the owner against the annual loan payments. Below 1.00 the business cannot pay its own debt. Most SBA lenders require at least 1.25×, and experienced buyers look for 1.50× or better so that a bad quarter is not an emergency.

DSCR = (SDE − Owner salary − Maintenance capex) ÷ Annual debt service

3. Measure the return on your own cash

Cash-on-cash return divides the cash the business puts in your pocket in year one by the cash you actually had to bring to closing — down payment, closing costs, and the working capital you leave in the business. It is the honest measure of what the deal does for you, and it is the reason leverage matters: the same business at the same price produces a very different return depending on how it is financed.

4. Know how much room you have to be wrong

The revenue cushion answers the question every buyer should ask before signing: how far can revenue fall before this deal is in trouble? Under 10% is fragile. A business with concentrated customers, no recurring revenue, and a thin cushion is a deal where one lost account ends the story.

What makes a deal score well

The score is weighted toward survival first and returns second, because a deal that cannot service its debt fails regardless of how good the return looked on paper:

Debt coverage (26%) — DSCR against the 1.25× lender threshold
Cash-on-cash return (22%) — year-one cash yield on invested capital
Purchase price (18%) — the multiple paid versus the industry band
Business quality (20%) — customer concentration, owner dependence, recurring revenue, tenure and trend
Downside cushion (14%) — tolerable revenue decline before coverage breaks

A deal with DSCR under 1.00 is capped at 32 no matter how attractive its other metrics look, and a deal producing no positive buyer cash flow in year one is capped at 30.

Common structures

Most main-street acquisitions in the United States are financed through an SBA 7(a) loan: roughly 10% buyer equity, 10% seller note on standby, and the balance from the bank over 10 years. Bringing more cash lowers debt service and raises DSCR but lowers your cash-on-cash return. A larger seller note keeps the seller invested in a clean handover and is usually cheaper than bank debt. Use the sliders to see the tradeoff move in real time.

What DSCR do I need to get approved?

Most SBA lenders require a minimum of 1.25× on a historical and projected basis. Conventional lenders often want 1.35× or more. Anything under 1.00 means the business cannot cover its own loan payments.

Should I use SDE or EBITDA?

Use SDE for owner-operated businesses under roughly $1M in earnings, where you will be replacing the owner yourself. Use EBITDA for larger businesses with a management team already in place, since a market-rate manager salary is already an expense.

What is a good cash-on-cash return on a business purchase?

Buyers typically target 20–35% in year one on a leveraged small business acquisition. Below 10% the deal rarely compensates for the risk and work involved; above 40% usually means either an underpriced business or an assumption worth re-checking.

How much working capital should I leave in the business?

Enough to cover roughly 60–90 days of operating expenses without depending on incoming receipts. Asset sales usually exclude cash and receivables, so this comes out of your pocket and belongs in the cash-required figure — not discovered after closing.

Does this replace due diligence?

No. This models the deal you have been told about. Quality of earnings work, verified tax returns, customer contracts, and lease terms are what confirm the inputs are real.

More deal tools: Dashboard · Valuation · Financing & DSCR · Scenarios · Offer Optimizer · Market Data · My Deals · Deal Memo · All CalcNest calculators

Results are estimates for educational purposes and do not constitute financial, tax, or legal advice. Industry multiples are indicative planning ranges, not appraisals. Consult a licensed professional before making an acquisition.