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Tools / Buying a business

Setting a purchase ceiling / Downloadable software

Max Purchase
Price Calculator.

Work backward from cash flow, the income you need, and your financing assumptions. See the purchase ceiling those numbers support before you negotiate.

Buy Max Purchase Price — $3 ↗

One-time purchase · Offline browser application + opening guide

See how the lower limit becomes a price ceiling
Juniper Cycle Repair: a fictional ceiling calculated from six stated assumptions.

When this helps.

You are preparing to negotiate a particular business and want to set a price limit from your own requirements. Explore how the cash flow, income you need, debt coverage, and borrowing terms affect the ceiling before discussing an offer.

Change the assumptions to see what moves the result and what you need to confirm with the seller or your advisers.

Bring six assumptions.

  • Annual owner cash flow, often called seller’s discretionary earnings (SDE).
  • The annual income you want to retain for yourself.
  • Your minimum debt service coverage ratio (DSCR).
  • A down payment percentage.
  • A blended annual interest rate.
  • The financing repayment term in years.

What you receive.

  • The Max Purchase Price Calculator HTML application and a plain-English quick-start guide.
  • A calculated purchase-price ceiling and the loan amount it implies.
  • The down payment cash required, monthly debt payment, and coverage at that ceiling.
  • An explanation of whether your income target or debt-coverage target sets the limit.
  • A summary you can copy into your own notes and keep for review.

Understand what the ceiling includes.

The calculator takes the lower of two debt limits: the amount supported by your DSCR target and the cash flow left after your income target. It then uses your financing rate, term, and down payment percentage to estimate a purchase ceiling.

This simplified scenario does not check your available cash, add closing costs or working capital reserves, or model separate loans and balloon payments. Allow for those alongside this calculation. It models a financed purchase, with a down payment below 100%.

Open it and keep the summary.

Extract the ZIP and open max-purchase-price-calculator.html in your desktop browser. It works offline without Excel, installation, or a product account. Use Load example to try fictional numbers before entering your own.

Entries are not saved between sessions. Use Copy summary and paste the result into a document you keep before closing or reloading. Show summary text provides a selectable version if automatic copying is unavailable. The summary is a readable record; it cannot be imported to restore the calculator.

A planning limit to review.

The result depends on the figures and terms you enter. It is not a market valuation, lender approval, or confirmation that a purchase is affordable. Review the cash flow, financing, costs, and purchase terms before relying on it.

Max Purchase Price / Worked example

Find the requirement that sets the limit.

Work backward from the lower of two debt limits, then apply the financing and down-payment assumptions.

01 / Two limits

Your income target can be the tighter limit.

Enter annual SDE of $120,000, a $60,000 annual owner-income target, and minimum coverage of 1.50×.

Coverage limit
$120,000 ÷ 1.50 = $80,000
Income limit
$120,000 − $60,000 = $60,000
Annual debt used in the model
$60,000 · the lower amount
This case is limited by owner income. In another case, the debt-coverage requirement can be the tighter constraint.

Rounded fictional outputs. The lower debt limit determines this simplified financing ceiling.

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