RAMOT Deal Tools

Deal Calculator

Analyze acquisition financing, DSCR, and valuation multiples

Business details

Industry?The type of business being acquired. Used to pull industry-specific valuation multiples, margin benchmarks, and SBA default rates for comparison.

Asking price?The seller's listed price for the business. This is the starting point for all valuation multiple calculations.

Revenue?Total annual gross revenue (top-line sales). Used to calculate the revenue multiple and cash flow margin.

Cash flow (SDE)?Seller's Discretionary Earnings — net profit plus owner salary, benefits, and one-time add-backs. The most common earnings metric for small business deals under $2M.

Bank financing

Rate (%)?Annual interest rate on the bank loan. Auto-filled with the current SBA 7(a) rate based on WSJ Prime Rate + 3.0% spread for acquisition loans over $350K. You can override this with a lender quote.

Term (yrs)?Loan repayment period in years. SBA 7(a) loans for business acquisitions are typically 10 years. Longer terms reduce monthly payments but increase total interest paid.

Down (%)?Down payment as a percentage of the asking price. SBA 7(a) loans typically require a minimum 10% down payment from the buyer.

Down ($)?Down payment in dollars. Changing this field will automatically update the percentage above, and vice versa.

Loan amount (optional override)

Seller financing

Amount ($)?Dollar amount the seller agrees to finance directly. Seller financing reduces the required bank loan and can improve deal feasibility.

Rate (%)?Interest rate on the seller note. Typically 5–8% for small business deals. Lower than bank rates but subordinate to senior debt.

Term (yrs)?Repayment period for the seller note in years. Typically 3–7 years, shorter than the bank loan term.

Additional items

Annual expenses (reduce SDE) ?Any recurring annual costs not already reflected in the SDE — e.g. a replacement manager salary, increased rent post-acquisition, or ongoing capex. These reduce adjusted SDE and directly impact DSCR.

One-time closing costs ?One-time costs paid at closing that are not financed into the loan — e.g. legal fees, QoE report, broker fees, lender origination fees, or working capital injection. Added to total acquisition cost and cash required at close.

Valuation

Asking price?The seller's listed price for the business. This is the starting point for all valuation multiple calculations.

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SDE?Seller's Discretionary Earnings as entered. This is the primary earnings metric used to value most small businesses under $2M enterprise value.

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SDE multiple?Asking Price divided by SDE. This is the most common valuation metric for small businesses. Lower multiples may indicate a better deal or higher risk.

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Revenue multiple?Asking Price divided by annual revenue. Useful for comparing asset-light service businesses. Less meaningful for low-margin industries like distribution.

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Revenue?Total annual gross revenue (top-line sales). Used to calculate the revenue multiple and cash flow margin.

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CF margin?SDE divided by Revenue, expressed as a percentage. Measures how efficiently the business converts sales into owner earnings. Higher is better.

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Financing structure

Total acq. cost?Total out-of-pocket cost to close the deal: Asking Price plus SBA Guaranty Fee plus any additional closing costs entered above.

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Cash down?Total cash required at closing: Down Payment plus SBA Guaranty Fee plus additional closing costs. This is what you need liquid on day one.

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Total debt?Combined bank loan plus seller financing. This is your total debt obligation entering the deal.

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SBA guaranty fee?One-time fee charged by the SBA: 2% on loans up to $150K, 3% up to $700K, 3.5% above $700K. This fee is typically financed into the loan.

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Monthly payment?Combined monthly debt service across all loans (bank + seller). This amount comes out of cash flow every month regardless of business performance.

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Annual payment?Total annual debt service across all loans. Used to calculate DSCR — divide SDE by this number to get your coverage ratio.

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Deal health

DSCR?Debt Service Coverage Ratio — SDE divided by Annual Loan Payments. SBA requires a minimum of 1.25x, meaning the business earns $1.25 for every $1.00 of debt payments. Above 1.5x is considered strong.

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Payback period?How many years it would take to recoup your cash down payment from the business's SDE. A rough measure of return speed — lower is better, typically under 3 years is strong.

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CIM Analyzer

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