ValuablyBY ATLANTIC COAST
VALUABLY / KNOWLEDGE FOR BUSINESS OWNERS

Learning Center

Your guide to understanding business value.

Explore 24 key concepts, follow illustrated examples, and test what you learn. Browse at your own pace—no financial information needed.

Explore the essentials
A 60-SECOND VALUE STORY

Hover over or select a step to follow the example.Tap a step to follow the example.

$180,000

Start with profit

This is what remains after the business’s recorded expenses. It includes the owner’s salary as an expense in this example.

Fictional example · SDE basis · Not an industry benchmarkTry the interactive lessons
YOUR GUIDE TO THE LANGUAGE OF VALUE

A little knowledge.
A clearer picture.

A collection worth exploring. Pick a cover, follow the example, and take one useful question into your next conversation.

Letter of intent (LOI)18 of 24 concepts

Swipe or drag the covers · Use the arrows · Select a cover to read

Next steps / EXPLAINED SIMPLY

Letter of intent (LOI)

The proposed deal framework: price, structure, timing and conditions. Some clauses, such as exclusivity or confidentiality, may be binding even when the purchase terms are not.

What does an LOI actually look like?Explore a fictional offer, section by section—with the questions worth asking before you sign.Further reading ↗
IN PRACTICE

A proposed price still depends on diligence, financing and a signed purchase agreement.

YOUR TAKEAWAY

Have your attorney explain what you are committing to before signing.

A question for your advisor

Which clauses bind us, and what still needs to be agreed?

Shares this educational concept only. No valuation results or financial information are included.
PUT YOUR KNOWLEDGE TO WORK

See it. Try it.
Make it click.

Three hands-on lessons using fictional businesses. Explore the choices behind a valuation, one idea at a time.

01 / COMPARE TWO BUSINESSES

Same sales. A different story underneath.

Both fictional businesses generate $1.5 million in annual revenue. Is that enough to tell what either one is worth?

Owner-led service business

Business A

Annual revenue$1,500,000
Owner-led service business

Business B

Annual revenue$1,500,000
Revenue tells us scale. It does not tell us value.

Sales alone do not show what remains after expenses, how much depends on the owner, or what could change after a sale.

Step 1 of 4

These examples are for learning. They do not use your business information or change your valuation.

03 / UNDERSTAND THE FINANCING

Could the business
support the loan?

A buyer may love the business and agree with the value. If they need financing, the earnings also have to support the proposed loan payments.

ILLUSTRATIVE CASH-FLOW CHECK
Payments covered1.50× in this example
Not a lender decision.

Meet DSCR.

Debt service coverage ratio compares cash available for debt payments with the payments themselves. It helps show the breathing room in a financed purchase.

Annual cash available for debtAnnual loan payments= DSCR
  1. 01

    Start with cash the buyer can actually use.

    SDE is before one working owner’s pay. Buyer compensation and other cash needs must be considered before treating earnings as available for debt. With EBITDA, avoid subtracting management pay twice.

  2. 02

    Count principal and interest.

    Debt service means the loan payments over the year, including principal and interest. It is more than the interest expense on a profit-and-loss statement.

  3. 03

    Leave room for the unexpected.

    A 1.00× ratio means the illustrated cash exactly covers the payments. A higher ratio leaves more room in this calculation for a slower month or a surprise cost.

STRESS-TEST THE CUSHION

What if cash available fell 10%?

A slower period can test the room behind the ratio. Here is the same loan with 10% less cash available for payments.

Selected example1.50×
With 10% less cash1.35×

Under this stress, $35,000 would remain after annual loan payments in this illustration.

This changes cash available, not revenue. It is one simple stress scenario; lenders may test other assumptions.
MAKE IT CLICK / FICTIONAL EXAMPLES

Watch the breathing room change.

Keep loan payments at $100,000 per year. Select how much annual cash is available to meet them.

Hover over or select an amount to see it change.Tap an amount to see it change.

1.50×
Room beyond the loan payments$150,000 ÷ $100,000 per year

About $1.50 available for every $1 of loan payments.

FOLLOW THE AVAILABLE CASH

Cash left after this illustrated acquisition loan. This is not owner take-home pay; excluded cash needs still matter.

ILLUSTRATIVE REPAYMENT SCALE
 Below 1.00×Cash shortfall
 1.00–<1.25×Limited cushion
Your example1.25× and aboveMore cushion
1.25× is this illustration’s reference point. Lender requirements and calculations vary.

Cash available is an assumed amount after buyer pay and other allowances for this lesson. A lender may calculate it differently and include additional obligations.

WHY THIS MATTERS TO YOUR ASKING PRICE

Value and financeability need to work together.

With the same down-payment percentage and loan terms, a higher price means a larger loan and larger payments. If cash stays the same, DSCR falls. That can limit what a financed buyer can support—even when a seller’s valuation expectations are higher.

Stronger documented earnings, more buyer equity, a different price or an appropriate financing structure can change the picture. DSCR alone does not set the business’s value.

Does a strong DSCR mean the loan will be approved?

No. Lenders also assess the reliability of earnings and addbacks, the buyer’s qualifications and credit, available equity, collateral where applicable, other debt, and program eligibility. Their calculation and required cushion can differ. The 1.25× point on this illustration is not a universal approval threshold.

What should I discuss with Atlantic Coast before setting a price?

Start with sustainable earnings, supported adjustments, the role a buyer must fill, and realistic financing assumptions. We can help explore how your value expectations fit the business and the types of buyers likely to pursue it.

Meet Atlantic Coast
04 / A MOMENT TO REFLECT

See what
stays with you.

Ready to put a few ideas together? Try ten short questions, with a useful explanation after every answer.

Take it at your own pace. You can review missed concepts and try again.
TRY A QUICK QUESTION1 / 10

Does an owner’s draw count as an addback?

The owner withdrew $60,000. That withdrawal did not reduce the profit shown in the business’s records.

Choose an answer to see the explanation. Take it at your own pace.

Practice stays on this page. Your answers do not affect your valuation.
YOUR NEXT CHAPTER, EXPLAINED

What does selling actually look like?

Meet the people involved, explore the interactive LOI-to-close timeline, and see what you can do to prepare.

Explore the selling journey
BETTER QUESTIONS. BETTER CONVERSATIONS.

Bring a clearer picture
to your next conversation.

Send your CPA or advisor a concept you want to discuss. Or explore how these ideas apply to your own business with a free valuation.

For CPAs, financial advisors and business attorneys: each concept has its own shareable link, plain-language example and discussion question. No client account is needed to learn.

Explore my business value