The 20-second answer
A good business to buy scores high on six things: debt coverage, low owner dependence, low customer concentration, durable revenue, a fair price, and a safe financing structure. This scorer weights those six into a single 0 to 100 number so you can compare deals objectively, and see which single factor is dragging a deal down before you write an offer.
How the score is built (the full methodology)
No black box. The score is a weighted average of six factors, each scored 0 to 100, with weights based on how often each one is what actually kills a small-business acquisition after closing:
| Factor | Weight | Why it's weighted this way |
|---|---|---|
| Cash flow coverage (DSCR) | 25% | If the business can't service its debt, nothing else matters. Lenders' first test, and yours. |
| Owner dependence | 22% | The #1 post-close failure mode: the business walks out the door with the seller. |
| Customer concentration | 18% | One big client can leave and take your DSCR with them. |
| Revenue durability | 15% | Recurring revenue survives a transition; project work has to be re-won. |
| Price vs. market | 12% | Overpaying is recoverable if the business is great, but it thins your margin for error. |
| Financing safety | 8% | Seller notes on standby and lower personal exposure protect you if year one is rough. |
Reading your score
- 80 to 100, Strong. A genuinely good deal. Do thorough due diligence and move.
- 60 to 79, Workable. A real opportunity with one or two fixable weaknesses. Structure around them.
- 40 to 59, Caution. The story might be good, but the fundamentals are shaky. Only proceed if you can fix the weak factor in the deal terms.
- Below 40, Walk away. The math or the risk profile is against you. There's always another deal.
The most useful output isn't the number, it's the lowest bar. That's the factor to fix in negotiation (price, seller note, transition period) or the reason to pass.
Use it to compare, not just to judge
Score three listings and the ranking becomes obvious fast. A disciplined buyer looks at 50 to 100 businesses before buying one. This is how you stay objective across all of them.
Frequently asked questions
Strong debt coverage, low owner dependence, a diversified customer base, recurring revenue, a fair price, and a financing structure that limits your personal risk. This tool scores all six.
No. It's a fast, objective screen based on your inputs. A high score still requires real due diligence and a Quality of Earnings review to confirm the numbers are what the seller claims.
Educational screening tool only, not financial advice or a recommendation to buy. Always verify with independent due diligence.
