"Will this buy fly?"™

Overview

The Business Acquisition Analyzer is a tool designed to evaluate potential business acquisitions by analyzing key financial and operational factors. The tool helps investors, business owners, and brokers assess the financial feasibility and attractiveness of acquiring a business based on inputs such as purchase price, revenue, expenses, loan terms, and more.

Features

• Financial Analysis: Calculates loan amount, monthly payments, annual debt service, net income, and key financial ratios.
• Acquisition Analysis: Assesses Debt Service Coverage Ratio (DSCR), Return on Investment (ROI), Payback Period, and Cash-on-Cash Return.
• Industry and Business-Specific Analysis: Analyzes business longevity, employee count, and the seller’s reason for selling to provide a detailed acquisition evaluation.
• Deal Indicator: Visual indicator (✅, ⚠️, ❌) to represent whether the acquisition is favorable, has risks, or is unattractive based on score.

Input Fields

1. Purchase Price (in $)
2. Down Payment (as a percentage)
3. Loan Term (in years)
4. Interest Rate (as a percentage)
5. Current Annual Revenue (in $)
6. Current Annual Expenses (in $)
7. Projected Annual Revenue Growth (as a percentage)
8. Industry Type (options include Retail, Service, Manufacturing, Technology, Other)
9. Number of Employees
10. Years in Operation
11. Seller’s Reason for Selling (options include Retirement, New Opportunity, Financial Difficulties, Relocation, Other)

Output

• Loan Amount: Total loan required after down payment.
• Monthly Payment: Calculated based on loan terms and interest rate.
• Annual Debt Service: Total annual loan payment required.
• Net Income: Revenue minus expenses.
• Debt Service Coverage Ratio (DSCR): Measures business' ability to pay back the loan.
• Return on Investment (ROI): Measures profitability of the acquisition.
• Payback Period: Time taken to recoup the purchase cost through net income.
• Equity Multiple: Total return on equity invested.
• Cash-on-Cash Return: Percentage return based on the cash invested.

Analysis

The analyzer evaluates the deal by taking into account several factors such as DSCR, ROI, years in operation, and seller’s reason for selling. Depending on these factors, the tool generates feedback and recommendations for further due diligence. Key due diligence areas include reviewing financials, customer and supplier relationships, market position, and legal obligations.

Visual Deal Indicator

• ✅ : Deal is considered favorable
• ⚠️ : Deal has some risks but is potentially viable
• ❌ : Deal is considered unfavorable

How to Use

1. Enter all required fields (purchase price, loan terms, revenue, etc.).
2. Click Analyze Acquisition.
3. Review the Financial Analysis, Acquisition Analysis, and the deal indicator to determine if the acquisition is worth pursuing.
4. Follow up on due diligence recommendations for deeper insights into the business acquisition. """