Decision tool
Deal Analyzer
Enter the numbers from any listing and get instant financial metrics, risk flags, negotiation angles and a due diligence checklist.
Verdict
This deal screens as higher risk on the metrics provided, pricing at 2.92× SDE against an estimated value range of $387,000–$614,000, the main issues to investigate are one item flagged below. Verify the earnings with tax returns and bank statements before relying on any of these figures.
- Price / Revenue
- 0.28×
- Price / SDE
- 2.92×
- Price / EBITDA
- 3.21×
- Estimated ROI
- 34.3%
- Payback Period
- 2.9 yrs
- Annual Debt Service
- $69,950
- DSCR
- 2.64×
- Cash Flow After Debt
- $115,050
- Cash-on-Cash Return
- 106.5%
- Break-even Cushion
- 6.1%
Asking price divided by annual revenue.
Most common multiple for owner-operated businesses.
Used more often for managed businesses above roughly $1M of earnings.
SDE as a percentage of the full purchase price.
Years of current SDE to repay the purchase price.
Based on your financing assumptions.
Lenders commonly want 1.25× or better.
What is left for the owner after loan payments.
Post-debt cash flow divided by cash invested.
Approximate revenue decline absorbed before debt service is at risk.
Fair value range for these inputs: $387,000 – $614,000 versus an asking price of $540,000.
- • Revenue is declining at about 4% — understand why before pricing the deal.
- • Price at 2.92× SDE sits at the reasonable end of the typical range.
- • Debt-service coverage of 2.64× gives a cushion against a downturn.
- • Revenue is well diversified across customers.
Score breakdown
Seller's discretionary earnings are 9.7% of revenue.
Asking price is 2.92× SDE compared with a common small-business range of roughly 2×–4×.
9 years of operating history with a 8.8% earnings margin.
Reported revenue trend of -4% year over year.
Category-level demand outlook based on WhatBiz industry model (sample data).
Business is described as owner operated with 4 employees.
Largest customer represents about 3% of revenue.
Seller indicates financing is available.
12% of revenue is recurring or contracted.
Estimated exposure to automation and AI substitution in this category.
- • Why are you selling, and what would you do differently if you kept the business?
- • Can you walk me through the add-backs used to calculate SDE, line by line?
- • What percentage of revenue comes from your top five customers, and how long have they been customers?
- • How many hours a week do you personally work, and which relationships depend on you?
- • What does the customer contract or agreement look like, and when do they renew?
- • Which employees are critical, and what are their compensation and tenure?
- • What is the state of the lease, equipment condition and any deferred maintenance?
- • Have you lost any significant customer in the last 24 months?
- • What pricing changes have you made in the last three years?
- • Would you consider seller financing or an earnout tied to retention?
- • Three years of tax returns reconciled to the P&L
- • Bank statements matched to reported revenue
- • Monthly revenue and gross margin by customer
- • Accounts receivable ageing and collection history
- • Payroll register and employee agreements
- • Lease, equipment schedule and maintenance records
- • Customer contracts, renewal terms and churn history
- • Supplier terms and pricing agreements
- • Licences, permits, insurance and any litigation history
- • Working capital requirement and normalization
- • Anchor around the estimated value range rather than the asking price alone.
- • Ask for a transition period with defined owner availability in the purchase agreement.
- • Confirm what working capital is delivered at closing — this is frequently disputed.
- • Request seller financing to align incentives and reduce required cash at close.
- • Include a non-compete with a defined geography and term.
The Deal Analyzer produces educational estimates from the figures you enter. It is not financial, investment, lending, accounting, tax or legal advice, and it is not a substitute for professional due diligence.