What Data You Need to Analyze a Business Acquisition

Before you can model a deal, you need the right numbers — and you need to know what each one means and where to get it. This is a plain-English reference for every input in the AcquireCalc deal calculator. Gather these from the seller's financial statements (balance sheet, income statement, cash-flow statement) and from your own verification. When a figure isn't documented, ask the seller directly and confirm it before relying on it.

Valuation Inputs

Asking price

The total price the seller wants for the business or its assets. This is the starting point, not the answer — your job is to test it against fair market value.

Annual revenue (trailing 12 months)

Total sales over the most recent 12 months. Use trailing actuals, not projections — projections are the seller's optimism, not data.

SDE / EBITDA (the earnings figure)

Profit is the basis of every valuation, and it's expressed in one of a few ways:

• Net income — the bottom line of the income statement (P&L).
• EBITDA — earnings before interest, taxes, depreciation, and amortization, after paying a market-rate manager. Best for businesses not run by the owner.
• SDE — Seller's Discretionary Earnings: EBITDA plus the owner's salary and personal perks (auto lease, personal expenses run through the business). Best when the owner is also the operator.

Match the earnings type to the multiple type — never apply an EBITDA multiple to an SDE figure. See our valuation multiples guide.

Asking multiple

Asking price ÷ earnings. This tells you how many years of profit the seller wants you to pay. The calculator computes it for you.

Industry multiple

The typical multiple businesses in this industry sell for. Research comparable sales and choose the lowest defensible figure. The gap between the asking multiple and the industry multiple (the multiple delta) shows how aggressively the business is priced.

Carveouts

Assets the seller keeps even though they're currently owned or used by the business — a personal vehicle, a securities account, a piece of real estate. A carveout reduces the purchase price by the net value (value minus any debt on it) of what's removed.

Asset Inputs (the balance sheet)

Every asset can potentially fund the purchase. For each, enter the verified current value; the calculator applies the funding percentage you set. (See how each method converts to cash.)

• Cash — balances in the company's bank and checking accounts.
• Accounts receivable — money customers owe the company.
• Notes receivable — money owed to the company under promissory notes.
• CDs / money market — certificates of deposit, money-market accounts, T-bills, and similar cash equivalents.
• Securities — fair market value of stocks, bonds, and other securities owned by the business.
• Raw materials — value of unprocessed materials on hand.
• Work in process — partially-finished goods between raw materials and sellable inventory.
• Finished inventory — goods ready to sell.
• Furniture, fixtures & equipment (FF&E / PP&E) — physical desks, machinery, processing and office equipment.
• Vehicles — company-owned cars, trucks, and fleet.
• Real estate — owned land and buildings; often the largest single funding lever.
• Manufacturing equipment — production and processing machinery.

Intellectual Property Inputs

Defensible IP — patents, trademarks, copyrights, and trade secrets — gives a business a competitive moat and can generate deal cash through licensing, sale, sale-leaseback, or royalty arrangements. Enter the estimated or appraised value of each type the business owns or exclusively licenses, and the cash it can contribute toward the price.

Recurring Revenue & Customer Metrics

These don't change the deal-stack math directly, but they're decisive for how much a business is worth and how durable its earnings are:

• Recurring revenue (ARR / MRR) — Annual or Monthly Recurring Revenue billed on a continuing basis, as opposed to one-time sales. Recurring revenue commands higher multiples.
• Annual churn — the percentage of recurring customers lost each year to cancellations or failed rebills. A 4% monthly churn means roughly 48% lost annually.
• Average months retained — how long the average recurring customer keeps paying.
• Customer lifetime value (LCV) — total value of an average recurring customer over their lifespan.
• Customer acquisition cost (CAC) — marketing and advertising spend in a period ÷ customers acquired in that period.
• Average order value (AOV) — total customer purchases in a period ÷ number of buying customers.

Deal-Structure Inputs

Seller financing

The percentage of the price the seller will carry as a note instead of taking all cash at closing. The most powerful lever in the stack — see the seller financing guide.

Earnout

Additional money paid to the seller after closing, contingent on the business hitting agreed revenue or profit targets. Structured as a percentage of price or a fixed dollar formula. Earnouts lower your closing cash and align the seller with the company's future.

Debt assumption

For each liability (accounts payable, notes, mortgage, related-party debt), enter the balance and how much the seller will pay off at closing. What remains, you assume "subject-to," and it reduces the cash price dollar-for-dollar.

Equity partners

Operating partners ("integrators") who run the business take equity instead of cash; outside investors buy a stake priced off the full valuation. Both reduce the cash you personally bring.

Due-Diligence Inputs Worth Confirming

Numbers are only as good as their source. Before trusting any figure, confirm:

• Financial statements provided? Did the seller give you a balance sheet, income statement, and cash-flow statement?
• Audited, reviewed, or compiled? Audited statements carry an accountant's opinion; reviewed and compiled do not. Know which you're looking at.
• Seller's reason for selling — the single best predictor of how flexible they'll be on terms.
• Capacity — what percentage of equipment and labor capacity is in use, and how many shifts run. This tells you how much growth is possible without new capital.

Now Put the Numbers to Work

With these inputs gathered, open the deal calculator and enter them. Each field has a built-in help tooltip if you need a quick reminder of what it means. The calculator instantly shows your fair-market-value ceiling, your suggested maximum offer, and the cash you'd need at closing once every funding layer is stacked.