Simple scorecard for quick deal evaluation?

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August 25, 2025

by a searcher from Marquette University in Louisville, KY, USA

Hi Folks, What do you have on your scorecard when you evaluate a deal? - EBITDA, SDE? - DSCR or Debt to Equity? - Customer concentration top 5 or top 10? - Free Cash Flow - GM%, Net Margin - Owner risk I'd love input on what your must have's are for the first blush on interest to pursue a deal.
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commentor profile
Reply by a professional
from Marquette University in Kirkland, WA, USA
You can only estimate ROI on free cash flow. EBITDA less anticipated cap ex. SDE is bogus because you will take a salary, a fair market salary. All the other things are important (as are the above comments) for analyzing a deal, very important. For customers it's more than concentration, it's also stickiness, GM per customer, etc. Plus, management team, key employees, suppliers and their diversity, technology, marketing program, and more.
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Reply by a searcher
from Harvard University in Toronto, ON, Canada
For us at Herencia, we focus on just 3 things - 1. Business quality/ stability (business model, size, age of business, mission-criticality of services provided and competition) 2. Revenue predictability (Recurring or re-occurring rev % vs project-based revs) 3. Profit margins and cash generation (How much revenue does the company keep and how quickly does it get paid)
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