Evaluate an Acquisition

The M&A workspace walks you through a full acquisition case: set up the deal, load the target's financials and your own historical numbers, capitalize the transaction, tune scenario assumptions, and read the combined projection and covenant output. The workspace is staged — each stage unlocks the next once its prerequisites are met — so you can follow it top to bottom on your first pass.

This guide covers one complete evaluation, from an empty deal to a defensible valuation and combined-earnings read.

Where it lives

Open Toolsets → Simulation → M&A.

You land on the deal list. Each existing deal appears as a card showing Purchase Price, Earnout, Revenue Multiple, and EBITDA Multiple, with the target's revenue and close date along the bottom. Click any card to open its staged workspace.

If the list reads Deals could not be loaded. That is not the same as there being none., the request failed; it says nothing about whether you have deals.

To remove a deal, use the delete control on its card. It asks first, naming the deal, and warns that this also removes its target financials, debt instruments, scenarios and earnout schedule and cannot be undone. Confirm with Delete deal or back out with Cancel. If the delete fails, the card says Deal not deleted. Try again.

Below the cards, Multi-target evaluations combines several deals that close as one transaction into a single lender model. Click New evaluation, give it a Name, a Close date and a Close mode (simultaneous closes every target on the close date; staggered closes them in sequence from it), and tick its Targets. Then set the combined assumptions:

• Combined tax rate (%), Capital expenditure (% of revenue) and Net working capital (% of revenue) — left blank, each deal's own figure stands.
• TTM EBITDA override ($) — left blank, it is computed from the targets. Enter it only for a diligence-adjusted figure the lender has accepted, because lenders size leverage from it.

Then click Create evaluation. Each evaluation carries its own Covenant schedule and Combined debt stack, and Reporting's lender-model export offers it by name. An evaluation can be edited (Save evaluation) or deleted. Deleting removes the evaluation with its covenant schedule and debt stack; the deals themselves stay.

tip

New to the screen? Click Tour in the top-right to launch the guided walkthrough. It opens the first deal, steps through the stages, and shows you the combined projection table.

Step 1 — Create the deal

1. On the deal list, click Add Deal (top-right).
2. A New Deal panel slides in from the right. Fill in:
   • Target Name * — the company you are evaluating. This is the only required field.
   • Deal Type — one of Asset Purchase, Stock Purchase, or Merger.
   • Status — Screening, LOI, Due Diligence, Closed, or Passed. Start at Screening.
   • Purchase Price — your headline price for the target.
   • Target Close — the expected close date.
   • Notes — any free-text context.
3. Click Create Deal. You will see a Deal created confirmation, and the new deal appears on the list.
4. Click the new deal's card to enter its workspace.

Inside the workspace, a left rail lists the six stages: Deal Basics, Target Financials, Deal Structure, Pro Forma, Scenarios, and Evaluation. A KPI bar across the top tracks Enterprise Value, Target Revenue, Target EBITDA, Purchase Price, Equity Required *, and Revenue Multiple as you fill the model in. These read as dashes until the underlying inputs exist.

Step 2 — Deal Basics

The Deal Basics stage opens on a KPI row and a Deal Details form.

The top KPIs summarize the target at a glance: Target Revenue, EBITDA, Asking Multiple (what the seller asked for), Entry Multiple (what you paid — purchase price divided by EBITDA), and Implied EV.

In Deal Details, complete the fields that drive the model. Each field saves when you click away from it:

• Purchase Price and Transaction Expenses — the cash going out at close.
• Close Date.
• Tax Rate (%) — used downstream in the earnings math. Defaults to 20%.
• Exit Multiple (x) — the multiple applied to terminal-year EBITDA when computing enterprise value. Leave it empty to require an explicit scenario or per-year override instead.
• Entry EBITDA Multiple (x) — purchase price over trailing EBITDA. If you leave it blank, the screen shows a derived hint; type a value to lock it onto the deal record.

EBITDA Margin is shown read-only, computed from the numbers above.

When the deal is named, click Enter Target Financials → at the bottom of the rail to advance.

Step 3 — Target Financials

This stage is where the target's earning power gets entered. It has three panels.

Target financials grid

The editable grid carries one row per fiscal year with these columns: FY, Revenue, GP %, Gross Profit, Indirect, EBITDA, Adjustments, and Adj EBITDA.

You edit Revenue, GP %, Indirect, and Adjustments directly. The grid computes the rest:

• Gross Profit = Revenue × GP %
• EBITDA = Gross Profit − Indirect
• Adj EBITDA = EBITDA + Adjustments

Enter GP % as a percent: type 42 for 42%. A year whose Revenue, GP % or Indirect is blank shows a dash for Gross Profit, EBITDA and Adj EBITDA, not a zero, because a blank means unknown. A blank Adjustments counts as none.

Edits save cell by cell, so there is no separate save button here.

Trailing Twelve Month (TTM)

The Trailing Twelve Month (TTM) panel shows TTM Revenue, TTM EBITDA (with margin), and Current Multiple (with the implied EV). Adjust the Market Multiple input to see the implied EV at a comparable-market multiple side by side with your current one. Data Source tells you how many months of data back the calculation.

Historical Financials

The Historical Financials panel captures the last three fiscal years of P&L and balance-sheet detail per entity. Entity tabs across the top let you switch between your own company and the target (Target A). Your company's cells auto-populate from booked actuals where available and render in teal; blue cells are edited-but-unsaved; white cells are saved manual entries. If the acquirer entity your company is configured with has no figures of its own, the panel uses the consolidated figures and says so in a note above the tabs.

Rows include Revenue, Direct Costs, Gross Profit, Indirect Expenses, Reported EBITDA, Adjusted EBITDA, D&A, CapEx, Cash, Accounts Receivable, Total Assets, Total Debt, and Equity. Enter values per year, then click the per-year Save button (for example, Save 2024) to persist that column. A confirmation appears for each saved year.

Once revenue and EBITDA are entered, the advance button reads Structure the Deal →. Until then it reads Enter revenue and EBITDA to continue and stays disabled.

Step 4 — Deal Structure

This stage capitalizes the transaction. It has three parts: Sources & Uses, the debt schedule, and the earnout.

Sources & Uses

Two columns, Sources and Uses, each totaling to Total Sources and Total Uses. A banner at the top tells you whether the two sides balance. The workspace will not let you advance until they do.

Debt instruments

The Plug Instrument selector is the fastest way to balance. Pick one instrument as the plug and the engine back-solves its principal as total uses minus every other source, so the deal balances automatically. Choose No plug (manual mode) if you would rather net sources and uses by hand.

• Use + Add Cash Source to add a cash-at-close row that can carry the plug like any other instrument (rate and term of zero).
• On each instrument card, click Set as plug to designate it (the badge flips to Plug ✓); the plug instrument's principal becomes read-only because the engine sets it.
• Click Edit on a card to change Interest Rate, Term, and Facility Cap (the plug's principal stays engine-controlled), then Save. If the save fails, your figures stay in the form. Each configured instrument shows an amortization schedule beneath it.
• To remove an instrument, use the delete control on its card. It asks first: the instrument's principal, rate and amortization come out of the capital structure, and sources and uses recalculates without it. Removing the plug also leaves nothing back-solving the funding gap, so sources and uses will not balance until you set another plug. Confirm with Remove instrument or back out with Cancel. A failed removal says Not removed. Try again.

Earnout

In Earnout Structure, set the Metric Type (Gross Profit, Adj. EBITDA, or Revenue) and, for a gross-profit metric, the GP Definition. Then set the Measurement Period, Max Earnout ($), the Negotiated Threshold ($), a Threshold Step ($) and Number of Steps, Payment Timing, and the Number of Earnout Years (1 to 3). Tick Carryforward if a missed year can be made up in later years, and set Carryforward % for how much of a missed year stays available. Use Earnout Adjustments to add or subtract normalization items (there are quick-add buttons for common ones, plus a custom row). The earnout trajectory and a sensitivity matrix compute automatically below as scenarios are added.

If the earnout settings contradict each other, the matrix says This matrix is built on inconsistent earnout configuration and lists what disagrees. The arithmetic is right; the inputs are not, so fix the settings before you rely on the figures.

When sources and uses balance, click Run Pro Forma →.

Step 5 — Pro Forma

The Pro Forma stage has two sub-tabs: Projections & Goodwill and Target Profile.

Projections & Goodwill

This is the first read on combined earning power. The combined projection table lays out, year by year:

• Acquirer Revenue, Target Revenue, and Combined Revenue
• Gross profit for each side and combined, plus combined margin
• Combined EBITDA and its margin
• The deductions that bridge to the bottom line: Integration Costs, Earnout Payments, and Total Debt Payments
• Combined Net Income — the highlighted bottom row, the combined earnings the deal produces after financing and integration

Use Target Growth Rate above the table to flex the target's forward growth; the acquirer grows at a 3% default. This is where you read whether the combined entity's earnings grow, hold, or compress under your assumptions.

The Synergies grid lets you enter revenue, cost, and integration-cost items by year. Goodwill & Intangibles shows the purchase-price allocation — Purchase Price, Allocated FV, and Residual Goodwill — with per-asset fair value, useful life, and annual amortization.

Target Profile

The Target Profile sub-tab holds the target's descriptive profile, its backlog, and a pro-forma revenue composition view that blends acquirer and target segments.

It also holds Target diligence: the diligence the lender model prints, entered on the deal in five grids — Top customers, Top contracts, Vehicle mix, Revenue cuts and Option-year risk. Each grid saves as a whole, so a save that fails changes nothing and says so.

Click Run Scenarios → to continue.

Step 6 — Scenarios: tune the assumptions

The Scenarios stage is where you stress the deal across cases (typically a downside, a base case, and an upside). A deal with none shows No Scenarios with a tile to add the first. Click + Add scenario, type a Scenario name (for example Downside, Upside or Lender case), and click Create scenario. A name already used on the deal is refused, because the name identifies the scenario. A new scenario starts neutral, with no revenue or margin adjustment and the full earnout, and you set its levers on its card.

Each scenario is a card with two blocks of editable levers.

Under Scenario Adjustments:

• Target Rev Adj — a percent applied to the target's revenue (positive is upside, negative is downside).
• Target Margin Adj — margin uplift or haircut, in percentage points.
• Acquirer Rev Adj and Acquirer Margin Adj — the same two levers for your own business.

Under Lender Modeling:

• Exit Multiple — overrides the per-year and deal-level exit multiple for this scenario.
• Stressed Multiple — the lender's downside exit multiple, used to compute loan-to-value.
• LTV Ceiling — the maximum loan-to-value the credit agreement allows.
• Synergy Realization — the percent of modeled synergies this scenario actually captures (base is 100; downside cases often use less).

Each lever saves when you click away. The card footer shows the scenario's projected EBITDA for its latest year.

For a year that should depart from the flat target adjustment, open Per-Year Overrides on the card. Click + Year, enter the year, and set a growth % (it replaces that year's year-over-year growth rate) and/or a margin % (it replaces the margin outright). Years you do not list keep the flat adjustment. The × removes a row. Click Save; you will see Per-year overrides saved, or Could not save overrides if it fails.

Below the cards, the Covenant Stress Test table shows, for every scenario and year, EBITDA, Leverage versus its max, DSCR versus its minimum, the resolved Exit (x), and — when a scenario carries lender inputs — loan-to-value versus its cap. Each covenant gets a pass/fail marker so you can spot which case breaks a covenant and in which year.

Use the Per-Year Covenant Schedule editor to set Leverage Max, DSCR Min, and Exit Multiple per fiscal year (these apply across all scenarios), then click Save Schedule.

Click Evaluate Deal → to reach the final stage.

Step 7 — Evaluation: score and read the verdict

The Deal Evaluation stage turns the analysis into a single weighted score. Five criteria — Growth Potential, Margin Quality, Strategic Fit, Integration Risk, and Price — each have a 0–10 slider and an editable Weight: field. As you move the sliders, the radar chart redraws and the Weighted Score: (out of 10) updates live. Your scores and weights are saved to the deal itself, not to your browser — so anyone else working that deal sees the same scores and weights you entered, and they survive a different machine or a cleared cache. Treat them as a shared, defensible record rather than a private scratchpad: if you move a slider, you have changed the number your colleagues will read.

When the deal carries a written recommendation, the stage shows it under Recommendation, with its decision badge.

If you have more than one deal, click Compare to Other Deals to open a side-by-side comparison across purchase price, target revenue and margin, EBITDA multiple, implied EV, debt and equity required, combined EBITDA in year 1 and year 3, DSCR in those years, and payback period. If the comparison fails to load, the button is followed by Comparison could not be loaded. Try again. rather than an empty comparison.

Reading the output

Three places give you the valuation and combined-earnings picture:

• The KPI bar (top of the workspace, every stage) — Enterprise Value, Purchase Price, Equity Required *, and Revenue Multiple are your headline valuation read. If Equity Required * turns negative it is flagged, signaling the capital structure over-funds the deal.
• The combined projection table (Pro Forma → Projections & Goodwill) — Combined EBITDA and Combined Net Income are the year-by-year read on whether the combined entity earns more than the two businesses did apart, after financing and integration drag.
• The Covenant Stress Test (Scenarios) — tells you whether the combined earnings actually service the debt in each case. A deal that looks accretive on net income but fails Leverage or DSCR in the downside case is not a clean deal.

note

Nothing on this screen requires a "recalculate" click — the projections, sensitivity matrix, and covenant tables recompute as you edit inputs. Give the KPI bar a moment to refresh after a large change.

If the KPI bar reads Analysis could not be loaded. The request did not complete, so these figures cannot say what the deal is worth., the request failed; it is not a deal without an analysis. Click Retry.

Save your work and export

• Use Save version (in the header) to snapshot the entire deal — target financials, scenarios, synergies, sources and uses, covenants, and debt structure — as an immutable record. Reload a snapshot later from the Load version… dropdown. Restoring overwrites the live state, so save any unsaved edits as a new version first.
• Use Export (top-right, or the download icon on each deal card) to download the full model to Excel.