Buyer’s Perspective: Is it worth it?

Understand if the deal “makes sense” for a potential buyer.

The Buyer's Perspective Calculator is a powerful tool designed to help you evaluate the financial implications of purchasing a business. By inputting basic acquisition details such as purchase price, down payment percentage, and loan terms, along with the business's current financial performance metrics (EBITDA or SDE), you can quickly assess whether a business opportunity makes financial sense for your investment goals.

Understanding both the headline purchase price and the true "take-home" profitability is crucial when evaluating a business acquisition. This calculator shows you exactly how loan payments will impact the business's cash flow, calculates your Debt Service Coverage Ratio (DSCR) to determine financing viability, and reveals the true bottom line after accounting for owner replacement costs. With this information, you can make confident, data-driven decisions about which businesses represent solid investment opportunities and which might stretch your financial resources too thin.

Buyer's Perspective Calculator

Buyer's Perspective Calculator

Financing Terms

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New Estimated EBITDA
New Estimated SDE

What is DSCR and Why It's Important

DSCR (Debt Service Coverage Ratio) measures a business's ability to cover its debt obligations with its operating income.

DSCR = Operating Income ÷ Total Debt Service

What it means:

  • DSCR > 1: Business generates enough income to cover debt payments
  • DSCR = 1: Business generates just enough to cover debt payments
  • DSCR < 1: Business does not generate enough income to cover debt payments

Most lenders require a minimum DSCR of 1.15 to 1.25 to approve business loans.

© Atlantic Coast Business Brokers - Buyer's Perspective Calculator

How to Use the Buyer’s Perspective Calculator

A Guide for Business Brokers

Get Started

    • Before meeting with a buyer, pre-populate the calculator with the actual listing data (purchase price, typical SDE/EBITDA)

    • Use realistic interest rates and terms based on current market conditions or lender pre-approval terms

    • Purchase Details: Start by confirming the purchase price and adjusting the down payment percentage based on the buyer's available capital

    • Loan Terms: Adjust the term and interest rate to match current SBA or conventional loan options

    • Financial Metrics: Explain the difference between EBITDA (more corporate view) and SDE (small business/owner-operator view)

    • Owner's Replacement Cost: Only include this if the buyer doesn't intend to work in the business as the previous owner did

    • Highlight the monthly payment amount—this is often the most tangible figure for buyers

    • Explain that the "True Net" shows what the buyer can actually expect to take home or reinvest

    • Emphasize the DSCR—explain that most lenders require at least 1.25, so values below this may indicate financing challenges

Key Talking Points

  • "Let's see how this business would look from your perspective as the new owner..."

  • "Here's what your monthly loan payment would be based on these terms..."

  • "Notice how the DSCR of [x.xx] indicates the business [can/cannot] comfortably support these loan payments..."

  • "With these numbers, you'd be taking home approximately $[amount] per year after all expenses and loan payments."

Common Scenarios to Prepare For

  • Negative True Net: "While the initial numbers show a negative cash flow, here are some strategies to improve profitability..."

  • Low DSCR: "This DSCR is below what most lenders require. We could explore increasing the down payment, extending the loan term, or negotiating the purchase price."

  • Owner's Role Concerns: "If you're planning to be less involved than the current owner, we need to factor in this replacement cost..."

Practical Tips

  • Use this tool early in discussions to set realistic expectations

  • Save multiple scenarios for each buyer to compare different businesses or financing structures

  • Remind buyers that this is a starting point—due diligence may reveal opportunities to improve profitability

  • When a business shows strong positive numbers, use this as leverage to move quickly on offers

Remember, this calculator is one of your most powerful tools for helping buyers move from emotional interest to analytical confidence in their purchase decisions.