Offer Optimizer

Work backwards from what the deal has to deliver. Set your coverage and return floors, and this solves for the highest price that still clears them.

Your targets

Live
1.25×
1.25× is the standard SBA floor. 1.50× gives you room for a bad year.
15%
Set to 0% to price on debt coverage alone.
The business
$
$
$
$
$
Structure
15%
10%
%

Your maximum supportable offer

Pay no more than
—
—
Asking price—
Your ceiling vs asking—
Negotiating room—
Opening offer
—
Anchored low but defensible — roughly the bottom of the sector band.
Target close
—
Where a fair deal usually lands, comfortably inside your limits.
Walk-away
—
Above this, the deal stops meeting the targets you set.

Price ladder

How the deal changes at each price
PriceMultipleCash to closeDebt service DSCRCash-on-cashBuyer cash flowScoreMeets targets

How structure moves your ceiling

Maximum supportable price
Stress-test at this price
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How to decide what to offer for a business

An asking price is a seller's opening position. It is frequently set by adding a round multiple to a best-case earnings figure, and it carries no obligation on you. The number that matters is the highest price at which the deal still works for you — and that number comes from the financing, not from the listing.

Price backwards from debt service

Start from the cash the business generates after you replace the owner, subtract a safety margin, and ask how much debt that can carry. Convert the debt back into a purchase price using your structure. That is your ceiling. Anything above it is a deal you are funding out of optimism.

Max debt service = (SDE − Owner salary − Capex) ÷ Target DSCR Max price ≈ Supportable debt ÷ (1 − Down % − Seller note %)

Set three numbers before you negotiate

Professional buyers walk into a negotiation with an opening offer, a target, and a walk-away already written down. The opening anchors the conversation near the bottom of the sector band. The target is where a fair deal realistically lands. The walk-away is the price above which the arithmetic stops working — and the discipline is leaving when you reach it.

Price is only one lever

If a seller will not move on price, move on structure instead. A larger seller note at a lower rate reduces bank debt and raises coverage. A longer amortization lowers the annual payment. An earnout ties part of the price to results you have not yet verified. Sellers often care more about the headline number than the terms behind it, and terms are where a buyer's real return is made.

What justifies paying at the top of the range

  • Contracted or subscription revenue with documented renewal rates
  • A management team that already runs the business day to day
  • A diversified customer base with no client above roughly 10% of revenue
  • Documented systems, clean financials and a real transition commitment
  • Assets included in the price — real estate, vehicles, usable inventory

In the absence of those, paying above the band is paying for a story.

How much below asking should I offer?
There is no fixed percentage. Offer what the cash flow supports at your target coverage. In practice, small businesses commonly close between 80% and 95% of asking, but a business priced at 5× SDE in a 2–3× sector may need a far larger gap, and a genuinely underpriced business may deserve full price immediately.
Should I tell the seller my maximum?
No. Your ceiling is an internal limit, not a negotiating position. Open below it, justify your number with the financing math, and keep the difference as room to concede on.
What if the maximum comes out above the asking price?
That means the deal clears your targets with room to spare at full price — which is worth verifying before you celebrate. Re-check the SDE add-backs, the customer concentration, and whether the earnings are trending down.

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Estimates for educational purposes only, not financial, tax, or legal advice.