EXPLORE BEFORE YOU SIGN UP

One business.
Three ways to finance it.

Walk through a fictional acquisition. See what you would need upfront, what the payments leave behind, and what still needs an answer.

Fictional sample · No account requiredEvery business detail and figure below is invented for demonstration. Nothing here is an available listing or financing offer.

01 / UNDERSTAND THE BUSINESS

Harbor Business Services

Fictional service business · Illustrative annual figures

Annual revenue$1,500,000

Seller discretionary earnings (SDE)$350,000

Assumed owner compensation$80,000

The full acquisition budget

Purchase price: $1,000,000
Transaction fees: $25,000
Opening working capital: $75,000
Total costs: $1,100,000

All three costs are included in each comparison. In this sample, no additional cash-only costs are assumed. Actual lender eligibility is unverified.

What the earnings mean

The fictional $350,000 SDE is before paying the new owner. We deduct $80,000 once, leaving $270,000 available before debt payments.

For EBITDA that already includes a market-rate operator salary, this assumption would need to change. We do not treat SDE and EBITDA as interchangeable.

Open questionThe largest customer represents 28% of revenue. Positive cash flow does not resolve that concentration risk.

02 / COMPARE THE STRUCTURES

Cash today. Breathing room tomorrow.

Choose a structure to see how buyer cash and debt payments change.

Acquisition capital required$220,000At closing in this example

Annual debt payments$136,762Senior loan + seller note

Cash after debt & owner pay$133,238Before tax, capex and further reserves

A starting point with 20% buyer cash and a smaller seller note.

Where the money comes from

Senior debt: $770,000
Seller note: $110,000
Buyer equity: $220,000
Total funding: $1,100,000

Funding matches the $1,100,000 budget. No investor equity is assumed.

Assumptions behind the numbers

Senior loan: 10% annual interest, 10-year amortization.
Seller note: 6% annual interest, 10-year amortization.
Both loans have monthly payments from month one; no standby or balloon.
Illustrative coverage after owner compensation: 1.97×.

Coverage = (SDE − owner compensation) ÷ annual debt payments. A lender may calculate coverage differently. These rates and structures are assumptions, not quoted offers.

03 / DECIDE WHAT TO VERIFY

A useful result includes the unanswered questions.

Try marking items reviewed in this sample. That does not verify the underlying facts.

0 of 4 sample items reviewed

Reconcile the $350,000 SDECompare tax returns, bank activity and the stated add-backs. The sample does not establish that these earnings are repeatable.Review the largest customerOne fictional customer supplies 28% of revenue. Check contract term, retention and what happens if that customer leaves.Validate working capitalThe $75,000 is a sample estimate. Reconcile receivables, payables, seasonality and the closing working-capital target.Confirm actual financing termsVerify eligibility, fees, guarantees, seller consent, and any balloon or standby terms. None is approved in this example.

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