£6,000,000
Price + initial uses − bank debt
M&A cash-flow simulator
What problem does this solve?
When buying a business, the purchase terms determine how much cash the buyer needs at closing and how much the acquired business must pay afterwards. Operating profit alone does not tell you whether the business can meet bank repayments, invest in its operations and pay the seller on the agreed dates.
This simulator combines operating assumptions with the proposed acquisition terms. It calculates five annual cash balances, highlights any funding shortfall and lets you test different assumptions. It is a free initial review for buyers and advisers. No company name or document upload is required; financial inputs stay in your browser.
Changing currency relabels amounts. It does not convert them.
PART 1
Worked case: buying an established business
This is a fictional acquisition. The business has year-one revenue of £12m. After variable and fixed operating costs, its operating profit before depreciation, interest and tax (EBITDA) is £2m. The buyer pays £9m at closing and agrees a further fixed payment of £3m in year three.
The buyer borrows £4.2m at 8%, repaid through equal annual principal over seven years. Initial fees, integration and additional working capital total £0.9m, plus a £0.3m cash reserve. The buyer therefore needs £6m of equity at closing.
The question is whether the business can cover its operating cash needs, bank payments and the year-three seller payment. Under the assumptions below, bank-service coverage remains above the selected 1.2× threshold, but the seller payment creates a £1.28m funding shortfall in year three. The revenue downside shows what changes if revenue is 10% lower in every forecast year.
First review this worked case and its assumptions. Then enter a separate case in Part 2. Changes to your own case do not alter this example.
Worked-case assumptions
Year 1 revenue£12,000,000
Contribution margin45 %
Year 1 fixed operating costs£3,400,000
Annual revenue growth3 %
Annual cost / capex growth2 %
Year 1 depreciation£300,000
Year 1 capital expenditure£400,000
Cash tax rate20 %
Incremental working capital / revenue growth10 %
Cash price at closing£9,000,000
Bank debt at closing£4,200,000
Annual interest rate8 %
Debt amortisation term7 years
Fixed deferred seller payment£3,000,000
Seller payment due in year3 1–5
Fees, integration & initial working capital£900,000
Cash reserve at closing£300,000
Minimum bank-service coverage1.2 ×
Worked-case results
£1,276,416
First negative year-end balance: year 3
1.42×
Passes your 1.2× threshold
The current terms need £1,276,416 of additional funding.
Compare a smaller seller payment, a later payment, lower bank debt or more buyer equity. The model does not assume a lender or buyer will fund the gap. Passing the bank-service test does not cover the seller payment.
Where the cash goes
Annual cash flow · GBP£691,200Year 1
£1,153,200Year 2
-£1,276,416Year 3
-£594,924Year 4
£200,493Year 5
| Cash bridge | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Revenue | £12,000,000 | £12,360,000 | £12,730,800 | £13,112,724 | £13,506,106 |
| EBITDA | £2,000,000 | £2,094,000 | £2,191,500 | £2,292,619 | £2,397,478 |
| Cash available for payments¹ | £1,327,200 | £1,350,000 | £1,410,384 | £1,473,492 | £1,539,417 |
| Bank principal + interest | £936,000 | £888,000 | £840,000 | £792,000 | £744,000 |
| Fixed seller payment | £0 | £0 | £3,000,000 | £0 | £0 |
| Closing cash balance | £691,200 | £1,153,200 | -£1,276,416 | -£594,924 | £200,493 |
¹ EBITDA less cash tax, capital expenditure and incremental working capital. Bank coverage excludes seller payments.
PART 2
Own case with assumptions
Enter your acquisition assumptions below. These inputs and results are separate from the worked case. You can use anonymous or hypothetical figures, and all monetary amounts must use the selected currency.
The form starts empty. If you want to explore alternatives to the worked case, choose “Copy worked-case assumptions”, change the terms and calculate. Copying those assumptions alone is not counted as a completed own analysis.
Your assumptions
Enter zero where a cost or payment does not apply. Annual growth rates can be negative, above −100%. The seller payment is fixed, not an earn-out.
03 / WHAT THIS CHECK DOES
One clear question. Explicit assumptions.
01. Model the business
Contribution margin less fixed costs produces EBITDA. Revenue and costs grow at your selected rates. The downside reduces revenue by 10% in every year, without automatically cutting fixed costs.
02. Apply the deal
Bank debt uses equal annual principal and interest on opening debt. Cash tax is floored at zero. Working capital is charged only on positive annual revenue growth. Year 1 is already normalised.
03. Find the gap
Cash accumulates over five years with no dividends, new loans or automatic equity top-ups. Seller consideration is a fixed payment, not an earn-out. A zero cash floor is used.
This is an initial screening tool, not a valuation or full due-diligence model. Annual balances can hide seasonal or intra-year shortfalls. Taxes are simplified; no loss carryforwards, debt tax limits, synergies or exit returns are modelled. Input quality determines result quality.