SBA acquisition calculator

September 03, 2020

by a searcher from Full Sail University in Milwaukee, WI, USA

Hi everyone, first post here, and glad to be joining the community!

I just wanted to share a calculator I built and have been using to estimate potential acquisition deals. This sheet is read-only, but you can make a copy and edit or modify for your own use if it's helpful.

https://docs.google.com/spreadsheets/d/1Z7vJvgA5CHJKc7az1cqyr8tHOh3LSEaeymooYoYeo-Q/edit?usp=sharing
My hope in sharing is twofold—first, if it's helpful to anyone, that's great! Second, many of you have much deeper experience than I. I'm seeking my first acquisition (thirdcoastsuccession.com for more) and would love any sanity checks. Do these numbers and formulas match your understanding?

Reply by an investor
from IESE Business School in Paris, France

Hi Elliot, your model works nicely, a few general comments, 85% is a very high leverage counterbalanced by a very low EBITDA price multiple of 3,2. I suggest you play this safer with more cash on hands especially in Covid times. Then EBITDA After P&I is not really a KPI to follow as yearly available cash to cover debt repayments is most of the time not equal to EBITDA in many business. Especially in growing business with changing WC or needed CAPEX companies that generate investment's debts. You could feel safe when in fact, along the 10 years period, you may be short of cash at some point. You need to make assumptions and calculate cash but this can not be done without a real target company as each cash behaviors are very different.

Reply by an intermediary
from University of Pennsylvania in Durham, NC, USA

Hi Elliot - nice model. It might be helpful to have a sources and uses section. I didn't spend much time, but couldn't get it to reconcile. For uses, I had $2,006,667 for acquisition, $100k operational cash, $60k professional services, and $70k loan fees. For sources, I had $300k Investor A, $100K Investor B, and $1,741,167 SBA Loan. Is the difference is $95,500 due to my calculations or the model?

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