Thanks for sharing, this is extremely helpful. One question - how should we think about the working capital in the Deal Uses? When we buy the business, it should come with the working capital already included - is the 10% assumption meant to reflect a cash buffer on top of that? Thanks!
Hey, I'm new to this field and your blog is a fantastic help! Really appreciate the quality content.
I have a quick question about the math on the Google Sheet, apologies if it's a basic one!
It's regarding the Buyers D&A which is depreciated over a 15 year period. In the net income figure on the top line, would this typically already have accounted for D&A?
What separates buyers D&A from your typically business assets D&A.
Used this model as a template for a deal I just evaluated - very helpful, thanks for sharing. Had a thought on the Hirable FTEs line... If we're already allocating replacement costs to get to buyer's EBITDA shouldn't we add that to usable free cash flow to get the true amount of cash available for additional bodies? If we wanted to be even more realistic you'd probably want to tax-adjust the usable FCF number since any additional FTEs would be a taxable expense. Curious your thoughts on this...
This is so useful. Thanks for putting the spreadsheet and post out there!
Thanks for sharing, this is extremely helpful. One question - how should we think about the working capital in the Deal Uses? When we buy the business, it should come with the working capital already included - is the 10% assumption meant to reflect a cash buffer on top of that? Thanks!
Thanks for this model and all the posts--super useful! And really appreciated.
I have a question on how the financial model goes from Buyer Net Income (NI) to Unlevered Free Cash Flow (aka FCFF).
When going from Net Income to FCFF
--the model adds back interest with no tax adjustment
--I would have thought Interest would have been INT (1- TAX RATE).
--per formula for FCFF to NI --> FCFF = NI + D&A +INT(1 – TAX RATE) – CAPEX – Δ Net WC.
How do you think about this? Thank you!
I like your google sheet! I am trying to add scenarios for seller notes and a preferred equity investor.
Any thoughts on how to set it up to quickly look at potential investor returns? https://docs.google.com/spreadsheets/d/1FSylZBt1zsPRwVvDsRiO7E1TufEBU8NVuES5D8tXzb8/edit?usp=sharing
Hey, I'm new to this field and your blog is a fantastic help! Really appreciate the quality content.
I have a quick question about the math on the Google Sheet, apologies if it's a basic one!
It's regarding the Buyers D&A which is depreciated over a 15 year period. In the net income figure on the top line, would this typically already have accounted for D&A?
What separates buyers D&A from your typically business assets D&A.
Thanks!
Used this model as a template for a deal I just evaluated - very helpful, thanks for sharing. Had a thought on the Hirable FTEs line... If we're already allocating replacement costs to get to buyer's EBITDA shouldn't we add that to usable free cash flow to get the true amount of cash available for additional bodies? If we wanted to be even more realistic you'd probably want to tax-adjust the usable FCF number since any additional FTEs would be a taxable expense. Curious your thoughts on this...