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 2.87× SDE against an estimated value range of $1,836,000–$2,607,000, 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
- 0.32×
- Price / SDE
- 2.87×
- Price / EBITDA
- 3.37×
- Estimated ROI
- 34.9%
- Payback Period
- 2.9 yrs
- Annual Debt Service
- $226,691
- DSCR
- 2.69×
- Cash Flow After Debt
- $383,309
- Cash-on-Cash Return
- 109.5%
- Break-even Cushion
- 7.1%
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: $1,836,000 – $2,607,000 versus an asking price of $1,750,000.
- • Customer concentration: the largest customer is about 28% of revenue. Losing it would materially change the economics.
- • 62% recurring or contracted revenue supports predictable cash flow.
- • Price at 2.87× SDE sits at the reasonable end of the typical range.
- • Revenue growth of about 8% suggests healthy demand.
- • Debt-service coverage of 2.69× gives a cushion against a downturn.
- • 18 years of operating history reduces execution risk.
Score breakdown
Seller's discretionary earnings are 11.3% of revenue.
Asking price is 2.87× SDE compared with a common small-business range of roughly 2×–4×.
18 years of operating history with a 9.6% earnings margin.
Reported revenue trend of +8% year over year.
Category-level demand outlook based on WhatBiz industry model (sample data).
Business is described as owner operated with 31 employees.
Largest customer represents about 28% of revenue.
Seller indicates financing is available.
62% 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.
- • Consider an earnout or holdback tied to retention of the largest customers.
- • 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.
Common questions
- What makes a small business acquisition a good deal?
- Cash flow that comfortably covers debt (DSCR above 1.25x), a price in line with comparable multiples, revenue that does not depend on the departing owner, and a customer base with no single dominant account.
- What is cash-on-cash return?
- Cash flow after debt service divided by the cash you actually invested. It shows what your down payment earns in year one, which is often far more informative than the headline multiple.
- Which red flags should stop a deal?
- Unreconciled or unavailable financials, one customer above roughly a third of revenue, licences that do not transfer, pending litigation, and revenue that declines once the owner steps back.
- How long should due diligence take?
- For a typical small acquisition, 30-60 days covering financial, legal, operational and customer verification. Use the checklist below as a starting structure with your advisors.