Pre-LOI Model

June 09, 2022
by a searcher from The University of North Carolina at Chapel Hill - Kenan-Flagler Business School in Indianapolis, IN, USA
Hello,
I built myself a financial model intended to help me with evaluating a prospective business pre-LOI. I'm at the point with this model that I'm blinded by how much time I spent tweaking it--so I'm offering it up to anyone here to use if they would provide me with some feedback on it.
Concept: take P&L and Balance sheet items, evaluate core ratios, evaluate the asking price/SDE multiple with the profitability, and stress test against a projected SBA loan debt service or revenue drop.
If anyone is interested, send me a message and I'll send the model over. Looking to make this model more sound before I start implementing it.
Thanks in advance!
from University of Southern California in North Palm Beach, FL, USA
from University of Notre Dame in Dublin, OH, USA
As a general word of advice: I would tread softly with excel models. At 3x cash flow and 80% LTV, any deal will look amazing!
Consider this quote from The Outsiders in the John Malone chapter:
"...Malone looked for no-brainers, focusing only on projects that had compelling returns. Interestingly, he didn't use spreadsheets, preferring instead projects where returns could be justified by simple math."