Most SME acquirers overpay by 15-20% because they don’t understand how deal structure affects true cost. This simulator shows you exactly what different financing approaches mean for your returns, risk, and cash requirements.
Model your acquisition financing in real-time. Adjust equity, debt, seller notes, and earn-outs to see how each component impacts your IRR, debt coverage, and actual cash needs. No spreadsheet required.
We have kept this model deliberately simple for first-pass calculations. If you read the FAQs at the bottom of this page you’ll learn about many more things you will need to take into account to build a detailed picture.
Important: This simulator is for illustrative purposes only and provides general guidance on acquisition deal structures. It does not constitute financial, legal, or tax advice. Every acquisition is unique and requires professional advice tailored to your specific circumstances. Always consult with qualified advisors—including accountants, tax specialists, and legal counsel—before making any acquisition decisions.
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1. Choose a Starting Scenario Click one of the three preset buttons to see typical deal structures:
2. Adjust the Deal Parameters Use the sliders on the left to customize:
3. Set Your Business Assumptions Tell us about the target:
4. Analyze the Results Watch the metrics update in real-time:
See beyond interest rates. The simulator shows risk-adjusted costs for each financing component – debt isn’t always cheaper than equity when you factor in risk.
The debt service coverage indicator turns red when you’re in risky territory. If EBITDA can’t cover debt payments by at least 1.5x, you’ll see the warning immediately.
Try multiple structures. Screenshot each one. Share with your board or partners. Make informed decisions based on data, not gut feel.
Understand what the seller actually nets after tax and time-value discounts. A £5m deal isn’t £5m if half is deferred. This builds better negotiation strategies.
The actual money you need available on completion day. Includes your equity contribution plus any day-one costs. This is what your bank account must show.
Your true cost of financing across all sources. Each component (debt, seller note, earn-out, equity) has different costs and risks. WACC blends them based on proportion of the deal.
What’s a good WACC?
Your projected annual return on investment assuming a 5-year hold and 6x EBITDA exit. This is simplified but directionally accurate for comparison purposes.
IRR Targets:
How many times EBITDA covers your annual debt and interest payments. Lenders typically want 1.5x minimum. Below that, you’re in the danger zone.
Coverage Guide:
Bank or institutional lending secured against business assets. Typically:
Financing provided by the seller (vendor financing). Typically:
Contingent payments based on future performance. Typically:
Your cash investment. Typically:
Result: 30% equity required, 28% IRR, 1.85x debt coverage – solid structure
Result: Only 10% equity needed, 45% IRR, but 1.15x debt coverage – risky!
Result: Requires more cash, 20% IRR, 2.8x debt coverage – very safe
How much can you actually deploy? Set equity contribution first, then work backwards to see what deal size you can afford.
Drop the EBITDA by 20% in your assumptions. Does debt coverage still work? If not, reduce leverage.
The simulator shows if your structure doesn’t add up to enterprise value. You need exact match or you’re missing a component.
If the seller wants maximum cash at close, minimize earn-outs. If they’re tax-planning, shift more to seller notes.
Model 3-4 structures, screenshot each, and compare side-by-side. Which feels right for your risk tolerance?
This tool models deal structure mechanics. It doesn’t:
Think of it as: Your first-pass financial modelling tool to understand structure options before engaging advisors.
Found a structure you like? Book a 30-minute strategy call with us to:
Planning multiple deals? Our Acquisition Readiness Sprint helps you:
Want to grow before selling? Our Buy-to-Exit Programme:
Use the simulator above to model your options. When you’re ready to move from theory to action, we’re here to help.
Disclaimer: This simulator provides illustrative scenarios for educational purposes. It does not constitute financial, legal, or tax advice. Actual deal terms, financing costs, and returns will vary based on numerous factors including market conditions, business performance, and lender requirements. Always consult with qualified advisors before making acquisition decisions.
This simulator focuses on the four most common SME deal components. Complex structures require bespoke modelling.
The IRR assumes a 5-year hold and 6x EBITDA exit multiple. Adjust your expectations based on your actual exit strategy and market multiples in your sector.
Tax on acquisitions is highly individual and depends on numerous factors we can’t know from a simple simulator:
What we do instead: The simulator uses a simplified 20% assumption in the “Seller’s Net Proceeds” section to illustrate the principle that deferred payments aren’t the same as cash today. Think of it as indicative, not prescriptive.
Your actual tax position could be anywhere from 10% to 45%+ depending on your circumstances. This is why tax advice is essential.
Again, this varies enormously:
The simulator focuses on deal structure mechanics—how different financing components affect returns and risk. Corporate tax planning is a separate (essential) conversation with your tax advisor.
bsolutely—but do it properly with your tax advisor, not in a simplified simulator.
Here’s why:
Tax treatment varies by structure:
Tax efficiency varies by entity:
Tax rules change:
Our recommendation: Use the simulator to understand deal mechanics and compare structures on a pre-tax basis. Then, work with your tax advisor to model the after-tax position for your specific structure that looks promising.
We know several excellent tax, legal and other advisors who specialise in M&A transactions. If you book a consultation with us, we’re happy to make introductions based on your specific needs and transaction size.
What you need are advisors with specific M&A experience, acquisitions are specialist territory.
The simulator doesn’t include:
Why not? Because these vary so dramatically by deal size and complexity. A £1m acquisition might have £30k in costs. A £10m acquisition might have £200k+ in costs.
What to do: When you move from simulator to real deal, create a comprehensive “Sources & Uses” statement with your advisor that includes all transaction costs.
It’s directionally correct but simplified. The IRR calculation assumes:
In reality:
Use the IRR as a rough comparison tool between structures, not as a prediction of actual returns.
It’s a conservative middle-ground assumption for illustration:
The 20% assumption helps sellers understand that £1m deferred over 3 years is worth less than £1m cash today—both because of tax and time value of money.
Your actual position will differ. For example:
We’re not tax advisors, so we can’t give you specific tax advice. However:
What we can do:
What you need:
If you’re working with us on a deal through our Buy-to-Exit Programme or Sourcing Engine, coordinating with your tax advisor is part of our process.
Yes! That’s exactly what it’s for.
Think of it as your first-pass analysis to understand:
Then, once you have a structure that looks promising, you take it to your advisors to:
The simulator helps you ask better questions and have more informed conversations with your advisors. It’s a planning tool, not a decision-making tool.
As part of our Buy-to-Exit Programme or deal execution support, we:
But we don’t replace your tax advisor—we work with them. Think of us as the M&A strategists who ensure tax considerations are built into the deal structure from day one, rather than being an afterthought.
The simulator is designed for buyer-side analysis. Sellers may prefer to see a term sheet or LOI rather than this tool. However, the “Seller’s Net Proceeds” section can help frame negotiations around true value.
This tool is designed for Exitologists and our clients. If you’d like a white-label version for your firm, contact us to discuss licensing.
Keep it simple: Use the simulator to understand deal mechanics.
Get it right: Work with qualified tax advisors for your specific situation.
Think holistically: The “best” deal structure balances tax efficiency, risk, returns, and strategic goals—not just one factor.
Need help finding the right advisors or structuring your deal properly? Get in touch.
Book a free 30 minute online consultation.
