Overview
The purpose of the Deal Structure Tool is to answer questions that buyers and sellers may have about specific opportunities they're contemplating:
Is this the right opportunity for me to acquire?
Should I just abandon this opportunity and reinvest in my own organic growth?
Is this the right prospect?
How can I structure this opportunity so that it is attractive to my acquirer and match my retirement goals?
By using Statements of Cash Flows the Deal Structure Tool will formulate different scenarios that will inform the user about the cash inflows and outflows during a set period and provide a useful analytical tool to help answer the questions above.
Moreover, the Deal Structure Tool can simultaneously be useful in evaluating past operations and assessing the profit potential of an opportunity.
The Deal Structure Tool makes simplifies reporting on cash flows on a combined business
Getting Started
From your Dashboard click on the "Get Started Now" button in the Cash Flow Analysis tile.
Form there you will be presented with a prompt to enter in a Purchase Price. This is the price of the entire or part of the book you are seeking to acquire or sell.
After you click Continue you will be presented with a Disclaimer. After carefully reading this you can press the Generate button. This will present you with three illustrations which to select from.
Select an illustration to review based on the description on the tile. You will then be presented with the Deal Structure scenario selected. In the following example the user is presented with the Deal Structure representing a Contingent Earn-out.
The Deal Structure Illustration is broken into 3-parts:
Buyer and Seller Summaries - used to toggle graphs and perspective tables and provide high-level Cash Flow Summaries.
Buyer and Seller Cash Flow Graphs - used to illustrate the level of Cash Flow over the Cash Flow Period
Buyer and Seller Perspective Tables - provides a detailed view of cash inflows and outflows and important metrics.
Editing Illustration
To edit the Illustration, click on the "Edit" button in the top right-hand corner.
This will reveal an "Edit" screen from the bottom of the screen.
Here you can edit a number of factors that will influence the Cash Flow projections. When you've completed updating your illustration select the Update and Save button and return to your illustration by clicking the X in the top right hand corner.
Elements include the following.
Name - you can name this something meaningful to the illustration you are projecting (ie. "Ohio book acquisition scenario A")
Seller and Buyer T12 and Growth Rate
Buyer Expenses - you can add the annual expense estimation and expense growth rate as well as the dealer retention percentage.
Tax Rate Assumptions - by default we use a manual tax rate. You can edit this rate or specify Dynamic which will calculate the tax rate for all parties each of the Cash Flow periods.
Deal Structure - here you can select from the various Deal Structure elements to include in your illustration. By toggling them on and off it will reveal that specific Deal Structure element's configuration menu below. These include:
Down Payment - specify the amount of the lump sum, which year it is provided to the seller / vendor, the amount of the down payment that was financed, for how many years and the interest rate.
Continuing Payments - this is the percentage of revenue that is shared with the seller. You can specify the number of years and the percentages of the Continuing Payment in each of the Cash Flow periods.
Fixed Payments - this is the fixed amount that is provided to the seller in each of the stated Cash Flow periods.
