Deal math
Project IRR, equity multiple, and year-by-year free cash flow on an ecommerce acquisition. Net of SBA debt service and operator salary, with 3 / 5 / 7 year exit scenarios. Free. No signup.
IRR on equity
84.0%
Net of debt service; assumes exit at year 5
| Yr | SDE | FCF |
|---|---|---|
| 1 | $350,000 | $72,850 |
| 2 | $378,000 | $100,850 |
| 3 | $408,240 | $131,090 |
| 4 | $440,899 | $163,749 |
| 5 | $476,171 | $199,021 |
IRR under 15% rarely beats a simpler alternative. 15–25% is healthy. 25%+ is what institutional searchers target on ecommerce roll-ups. Model conservatively — exit multiples contract in a recession.
Assumes a single-tranche SBA 7(a) loan and constant operator salary. Does not model working-capital draws, taxes, or any capex reinvestment. Use this as a gut-check on deal IRR before spending diligence dollars; a full model should live in a spreadsheet.
Next step
5-minute SBA pre-qualification through eCommerceLending. No credit pull.
Upgrade your toolkit
Starter at $15/mo unlocks 10 LOIs, 10 business plans, and Deal Analyzer.
Cash-on-cash tells you year-1 yield; IRR tells you the return on the entire hold including exit. A buyer can have a mediocre cash-on-cash but a 25%+ IRR if the business grows SDE during the hold and exits at a reasonable multiple. Both matter — year-1 cash-on-cash funds the buyer's life, IRR decides whether the deal beat alternatives like index funds or salary-plus-401k.
Independent sponsors and search-fund operators typically underwrite to a 25%+ IRR on equity. Self-funded operators accept lower — 15–20% — because they also draw an operator salary that a passive investor would not. Below 15% IRR, the deal is usually only attractive if the salary + optionality make up the difference.
Assume no — and model a range. Exit multiples expand in low-rate environments and contract in tight ones. For conservative underwriting use a 0.25–0.5× haircut below what you paid. If the business grew during your hold, that compensates: 3.0× on $500k SDE ≫ 3.0× on $350k SDE.
Yes — remaining loan balance is computed on a standard amortization schedule, so exit proceeds are net of the actual principal still owed at year N. If the loan term is 10 years and you exit at year 5, roughly 30–35% of the principal has been paid down, which is real equity build on top of any multiple expansion.
SDE growth assumption. A 5% CAGR looks modest; a 15% CAGR looks aggressive. Compound effects dominate the IRR, so be ruthlessly conservative about growth unless you have concrete operational levers (pricing power, new channel, unmet demand). Stress-test with 0% growth before you sign.