Business Acquisition Calculator NZ 2026/27
Buying a business is underwritten the same way a property is, and most buyers do considerably less arithmetic on it. This page tests whether the target can service its own purchase price and still pay you properly, which is the question that decides whether you have bought an investment or an expensive job. It funds the purchase the way real deals are funded, with a deposit, vendor finance on its own rate and term, and bank debt on another, then adds the two costs buyers routinely forget: the working capital the business needs from settlement day, and the legal, accounting and due diligence fees. Against that it sets the earnings, less a genuine market wage for the role you will be doing, and reports the annual cash flow, the debt service coverage ratio, the cash-on-cash return on the money you actually invested, and how long it takes to get that money back. Two outputs matter most. Break-even revenue tells you how much of the business's turnover could disappear before the structure fails, which matters because customer losses after a change of ownership are common rather than exceptional. And the maximum supportable price gives you a walk-away number to decide before you start negotiating instead of during it.
Debt service = the annual table repayment on the vendor finance plus the annual table repayment on the bank debt, each on its own rate and term.
Cash required = deposit + working capital at settlement + acquisition costs. The deposit alone materially understates what you need on the day.
Annual cash flow = earnings − owner wage − total debt service. The wage is deducted before the return is calculated, deliberately, so the figures describe the return on your capital rather than on your labour.
DSCR = (earnings − owner wage) / debt service. Owner wage is deducted first because you have to live, and a lender will assume you do.
Cash-on-cash = annual cash flow / cash required. Payback = cash required / annual cash flow, a simple payback ignoring any exit value.
Break-even revenue = (owner wage + debt service) / the earnings margin, where the margin is earnings / current revenue. It assumes the margin holds as revenue falls, which is optimistic, since fixed costs mean margins usually compress.
Maximum supportable price is solved by bisection: the highest total debt whose service still meets your minimum DSCR, holding the vendor and bank proportions constant, plus the deposit.
Assumptions: earnings continue at the level entered, rates are fixed, and no capital expenditure is required. Real acquisitions usually need some.
Not financial, tax or legal advice. Last verified: .
What the deal costs you on day one
| Purchase price | $1,000,000.00 |
| Implied multiple of earnings | 2.43× |
| Funded by your deposit | $250,000.00 |
| Funded by vendor finance | $150,000.00 |
| Funded by bank debt | $600,000.00 |
| Plus working capital needed at settlement | $80,000.00 |
| Plus acquisition costs | $35,000.00 |
| Total cash you must have | $365,000.00 |
| More than the deposit alone by | $115,000.00 |
What it earns you each year
| Verified earnings (SDE or adjusted EBITDA) | $411,500.00 |
| Less a proper wage for your role | $120,000.00 |
| Earnings available to service debt | $291,500.00 |
| Less vendor finance at 6% over 4 years | $42,273.05 |
| Less bank debt at 8.5% over 7 years | $114,022.70 |
| Annual cash flow | $135,204.25 |
| Debt service coverage ratio | 1.87 |
| Cash-on-cash return | 37.04% |
| Payback on cash invested | 2.70 years |
How much room the deal has
| Earnings as a share of revenue | 22.24% |
| Revenue needed to cover wage and debt | $1,242,155.85 |
| Current revenue | $1,850,000.00 |
| Revenue it can afford to lose | $607,844.15 |
| As a percentage of current revenue | 32.86% |
| Maximum price at a 1.25 DSCR | $1,369,032.37 |
| Headroom above the asking price | $369,032.37 |
The no-wage test
| Cash flow if you took no wage at all | $255,204.25 |
| DSCR on that basis | 2.63 |
| Difference your wage makes | $120,000.00 |
Cash flow is positive with a full wage, so the deal stands on its own rather than depending on you working for nothing.
Underwrite It, Do Not Just Value It
Most buyers spend their effort on whether the price is fair. That is the wrong first question. A fair price you cannot service will still fail, and a slightly high price on a business that comfortably covers its debt and pays you properly can work perfectly well.
The order that matters is: can it service the debt, will it pay me, and how long until I have my money back. Only then does the multiple become interesting.
Worked Example: $1,000,000 On $411,500 Of Earnings
The business earns $411,500.00 of verified SDE. At $1,000,000.00 the implied multiple is 2.43 times, which sits in the normal range for an owner-operated New Zealand business.
Funding is $250,000.00 of deposit, $150,000.00 of vendor finance at 6% over four years, and $600,000.00 of bank debt at 8.5% over seven. Those repayments are $42,273.05 and $114,022.70 a year, totalling $156,295.75 of debt service.
Take a $120,000.00 wage first, leaving $291,500.00 available to service debt. After the $156,295.75, annual cash flow is $135,204.25.
Coverage is 1.87, comfortably above the 1.25 most lenders require. Return on the $365,000.00 actually invested is 37.04%, and payback is 2.70 years.
The Deposit Is Not The Cash You Need
The single most common funding mistake is budgeting for the deposit and nothing else.
The business needs working capital from settlement day: stock to sell, wages to pay before the first debtors arrive, and the float that the vendor was quietly providing and takes with them. That is $80,000.00 here. Acquisition costs, being legal, accounting and due diligence, add $35,000.00.
So the deposit is $250,000.00 and the cash required is $365,000.00, which is $115,000.00 more. A buyer who arrives with exactly the deposit begins ownership underfunded during the months when they understand the business least. Our Business Cash Buffer Calculator sizes what should sit behind that.
Pay Yourself First, In The Model
Deducting the wage before calculating the return is deliberate, and it is what separates buying a business from buying a job.
Without a wage the same deal shows $255,204.25 of cash flow and a coverage ratio of 2.63. Those numbers are not wrong, they are just describing something different: the combined return on your capital and your unpaid labour, presented as though it were all a return on capital.
If a deal is only viable on the no-wage basis, it is worth naming that plainly. You may still want it, because owning the business you work in has real advantages. But you are buying employment at a price rather than making an investment, and the return figures should not be compared with what the same capital would earn elsewhere.
Break-Even Revenue Is The Risk Measure
Earnings are 22.24% of revenue. Covering the wage and the debt service needs $276,295.75 of earnings, which requires $1,242,155.85 of revenue against the current $1,850,000.00.
The business can therefore lose $607,844.15, or 32.86% of its revenue, before the structure fails. That is a genuinely comfortable margin.
It matters because losing customers after a change of ownership is normal rather than exceptional, particularly where the vendor held the relationships personally. A deal whose break-even revenue sits at 90% of current turnover has almost no tolerance for that, and customer concentration is the first thing to test in due diligence. Our SDE Calculator shows how much of the earnings depend on the owner personally, which is the same risk seen from the seller's side.
Decide Your Walk-Away Price Before You Negotiate
At a 1.25 coverage ratio the earnings support a maximum price of $1,369,032.37, which is $369,032.37 above the asking price.
Treat that as a ceiling, not a target. Paying it would take coverage from 1.87 down to exactly the minimum, leaving nothing for a bad quarter, a rate rise or the customer who leaves in month four.
Its value is that it exists before the conversation starts. Negotiations create pressure to justify a higher number, and a limit calculated in advance from the earnings is considerably more robust than one arrived at across a table. Write it down, and if the price goes past it, the answer is no.
Related NZ Business Buying Calculators
- SDE Calculator: verify the earnings before you rely on them.
- Business Valuation Calculator: whether the price is reasonable.
- Debt Service Coverage Ratio Calculator: the covenant in detail.
- Business Loan Structure Calculator: how to structure the borrowing.
- Business Health Check Calculator: run the target's ratios before you commit.
Related calculators
- 12 Hour Shift Pay Calculator NZ: Pay Per Shift and Year.
- Business Budget Calculator: Monthly Profit and Margin NZ.
- Business Cash Buffer Calculator NZ 2026/27: How Much Reserve You Need.
- NZ Business Days Calculator 2026: Working Days Between Dates.
How to underwrite a business acquisition
- Start with the earnings, not the asking price. Enter the seller's discretionary earnings or adjusted EBITDA that you have verified, not the figure in the listing. The multiple you are paying falls out of that rather than being decided first.
- Set out how the purchase is funded. Deposit, vendor finance and bank debt, each with its own rate and term. Vendor finance is usually cheaper and shorter, which matters because the repayment lands in the years you are least established.
- Add the cash the deal needs beyond the price. Working capital at settlement and acquisition costs. Buyers routinely budget the deposit and forget these, and they are cash out the door on the same day.
- Pay yourself a proper wage. Enter what the role is genuinely worth. A deal that only works because you take nothing is not an investment, it is buying a job at a price.
- Read the coverage ratio before the return. Debt service coverage decides whether the deal is fundable and survivable. Cash-on-cash return decides whether it is worth doing. Coverage comes first because a good return you cannot service is not available to you.
- Check the maximum supportable price. The calculator solves for the highest price the earnings will service at your minimum coverage ratio. That is your walk-away number, and it should be set before negotiation rather than during it.