Acquisition Feasibility Model — Interactive Walkthrough
This is an interactive preview of the acquisition feasibility model delivered to every screening client. The model contains 14 worksheets covering valuation, financial analysis, deal structuring, and funding feasibility — built to give a buyer everything needed to make a go or no-go decision.
How to navigate: Click any section heading in the left-hand panel to jump directly to that worksheet. Alternatively, click Guided Tour in the top right corner to step through the entire model in sequence, with analyst commentary explaining what each section does and why it matters.
A note on formatting: The working model is delivered in Excel. What you see here is a web-based representation of the same data. The layout differs from the spreadsheet, but every field, every figure, and every worksheet shown in this preview exists in the delivered model. The unlocked Excel version includes live formulas, conditional formatting, and full editability.
ACHIEVE CORPORATION
Valuation Model — Precision Engineering Ltd
CONFIDENTIAL
The cover page identifies the subject company, confirms confidentiality, and sets the scope of the engagement. Every document leaving Achieve Corporation carries this front sheet.
Cover Page
Overview| Prepared for Private Banking & Wealth Management Review | |||||||||
| Valuation Date: 31 March 2025 | |||||||||
| Report Date: 27 February 2026 | |||||||||
| Company | Precision Engineering Ltd | Gross Margin | 36.0% | ||||||
| FY2025 Turnover | £27 million | EBITDA Margin | 13.7% | ||||||
| Sector | Engineering Services | Current Ratio | 2.5x | ||||||
| Employees | 185 (estimated) | Altman Z-Score | 3.84 | ||||||
| Founded | 1998 | Assessment | ✅ Safe Zone | ||||||
| Enterprise Value Range | £24,195k | — | £30,265k | ||||||
| Equity Value Range | £23,045k | — | £29,115k | ||||||
| Methodologies: DCF (Base Case) · EV/EBITDA Multiples · EV/Revenue Multiples | |||||||||
| Basis of Value: Market Value, 100% equity basis, going concern | |||||||||
| 1 | Dashboard | Executive summary, KPIs, valuation overview | |||||||
| 2 | Profit & Loss | 3-year historical income statement (FY2023–FY2025) | |||||||
| 3 | EBITDA Bridge | Adjusted EBITDA reconciliation with normalisation | |||||||
| 4 | Balance Sheet | 3-year balance sheet with net asset analysis | |||||||
| 5 | Ratios & Statistics | Profitability, liquidity, solvency, DuPont, Z-Score | |||||||
| 6 | Forecast, DCF & Comparables | 5-year forecast, DCF valuation, comparable analysis | |||||||
| This report has been prepared using illustrative test data for demonstration purposes. All financial figures, comparable company data, | |||||||||
| and valuation conclusions are hypothetical and should not be relied upon for investment decisions. A formal valuation would require | |||||||||
| audited accounts, management interviews, and independent market research. This document is strictly confidential and intended solely | |||||||||
| for the addressee. | |||||||||
The dashboard is the executive summary — three valuation methods side by side, key performance indicators, and the screening anchor. A board member should be able to read this single page and understand the opportunity.
Dashboard
Overview£27.0M
FY2025 Revenue
£26.7M
Screening Anchor
32.2%
ROCE
0.07x
Net Debt / EBITDA
| BUSINESS VALUATION REPORT | |||||||||
| Precision Engineering Ltd | Valuation Date: 31 March 2025 | CONFIDENTIAL | |||||||||
| VALUATION SUMMARY | |||||||||
| Methodology | EV (£'000) | Equity (£'000) | FY2025 Metric | Value | |||||
|---|---|---|---|---|---|---|---|---|---|
| DCF (Base Case) | £24,195 | £23,045 | Revenue | 27000 | |||||
| EV/Revenue (Comps) | £29,816 | £28,666 | Reported EBITDA | 3699 | |||||
| EV/EBITDA (Comps) | £30,265 | £29,115 | Adjusted EBITDA | 4049 | |||||
| Total Assets | £13,493 | ||||||||
| Implied Valuation Range | Total Equity | £6,941 | |||||||
| EV Range (£'000) | £24,195 | to | £30,265 | Net Debt | 250 | ||||
| Equity Range (£'000) | £23,045 | to | £29,115 | Altman Z-Score | 3.84 | ||||
| Assessment | ✅ Safe Zone | ||||||||
| FINANCIAL RATIOS | |||||||||
| Ratio | FY2023 | FY2024 | FY2025 | FY2023 | FY2024 | FY2025 | |||
| Gross Margin | 36.0% | 36.0% | 36.0% | Gross Margin | 36.0% | 36.0% | 36.0% | ||
| EBITDA Margin | 13.5% | 13.5% | 13.7% | EBITDA Margin | 13.5% | 13.5% | 13.7% | ||
| Net Margin | 7.7% | 7.8% | 8.0% | Net Margin | 7.7% | 7.8% | 8.0% | ||
| ROE | 36.2% | 33.1% | 31.1% | ||||||
| ROA | 14.9% | 15.4% | 16.0% | ||||||
| Current Ratio | 2.28 | 2.38 | 2.49 | ||||||
| Quick Ratio | 1.69 | 1.81 | 1.92 | ||||||
| Debt/Equity | 63.4% | 47.1% | 35.3% | ||||||
| Interest Coverage | 17.61 | 20.74 | 24.66 | ||||||
| Revenue Growth | n/a | 8.0% | 6.5% | ||||||
| ROCE | 31.8% | 31.9% | 32.2% | ||||||
| Valuation Chart Data | EV (£'000) | ||||||||
| DCF | £24,195 | ||||||||
| EV/Revenue | £29,816 | ||||||||
| EV/EBITDA | £30,265 | ||||||||
Five funding structures ranked by affordability. Each scenario models a different mix of bank debt, deferred consideration, vendor loan notes, and equity — stress-tested against DSCR and EBITDA coverage thresholds.
Deal Scenarios
Deal Structure| DEAL SCENARIO COMPARISON | ||||||||||
| 5 Funding Structures Ranked by Affordability (DSCR & EBITDA Coverage) | ||||||||||
| £'000 | ||||||||||
| Description | Conservative: Bank + Large Equity | Bank + Deferred (4yr) + Equity | Bank + Deferred + Balloon Refi | Bank + Loan Notes + Balloon Refi | Full Creative: All Sources | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| DEAL PRICE (£'000) | 28000 | 28000 | 28000 | 28000 | 28000 | |||||
| FUNDING SOURCES (Day 1) | ||||||||||
| Max Bank Debt (from Feasibility) | 11097 | 11097 | 11097 | 11097 | 11097 | |||||
| % of Max Capacity | 1 | 90.0% | 90.0% | 72.0% | 81.0% | |||||
| Senior Bank Debt | 11097 | 9987 | 9987 | 7990 | 8989 | |||||
| Completion Payment (Buyer Equity/Cash) | 16903 | 11818 | 10818 | 10815 | 8816 | |||||
| Deferred Consideration | 0 | 2195 | 2195 | 3195 | 2195 | |||||
| Deferred Term (years) | 0 | 4 | 4 | 4 | 4 | |||||
| Vendor Loan Notes | 0 | 0 | 0 | 2000 | 2000 | |||||
| Loan Note Rate | 0 | 0 | 0 | 4.0% | 4.0% | |||||
| Loan Note Term (years) | 0 | 0 | 0 | 4 | 4 | |||||
| Balloon (refi via new bank facility at Yr 4) | 0 | 4000 | 5000 | 4000 | 6000 | |||||
| Balloon Refi Rate | 0 | 0 | 7.5% | 7.5% | 7.5% | |||||
| Balloon Refi Term (years) | 0 | 0 | 5 | 5 | 5 | |||||
| TOTAL SOURCES | 28000 | 28000 | 28000 | 28000 | 28000 | |||||
| Balance Check | 0 | 0 | 0 | 0 | 0 | |||||
| YEAR-BY-YEAR CASH FLOW WATERFALL (4yr deferred period) | Scenario 1 | Scenario 2 | Scenario 3 | Scenario 4 | Scenario 5 | |||||
| Scenario 1 | Scenario 2 | Scenario 3 | Scenario 4 | Scenario 5 | ||||||
| EBITDA (from Projections) | ||||||||||
| Year 1 (FY2026) | £3,884 | £3,884 | £3,884 | £3,884 | £3,884 | |||||
| Year 2 (FY2027) | £4,078 | £4,078 | £4,078 | £4,078 | £4,078 | |||||
| Year 3 (FY2028) | £4,282 | £4,282 | £4,282 | £4,282 | £4,282 | |||||
| Year 4 (FY2029) | £4,496 | £4,496 | £4,496 | £4,496 | £4,496 | |||||
| TOTAL ANNUAL COST BY YEAR | ||||||||||
| Yr 1: Bank P+I + Deferred + LN | £2,362 | £2,675 | £2,675 | £2,281 | £3,042 | |||||
| Yr 2: Bank P+I + Deferred + LN | £2,362 | £2,675 | £2,675 | £2,281 | £3,042 | |||||
| Yr 3: Bank P+I + Deferred + LN | £2,362 | £2,675 | £2,675 | £2,281 | £3,042 | |||||
| Yr 4: Bank P+I + Deferred + LN | £2,362 | £2,675 | £2,675 | £2,281 | £3,042 | |||||
| DSCR BY YEAR (EBITDA / Total Annual Cost) | ||||||||||
| Year 1 | 1.64 | 1.45 | 1.45 | 1.70 | 1.28 | |||||
| Year 2 | 1.73 | 1.52 | 1.52 | 1.79 | 1.34 | |||||
| Year 3 | 1.81 | 1.60 | 1.60 | 1.88 | 1.41 | |||||
| Year 4 | 1.90 | 1.68 | 1.68 | 1.97 | 1.48 | |||||
| 4-YEAR ACQUISITION CLEARANCE | ||||||||||
| Completion Payment (Day 1) | 16903 | 11818 | 10818 | 10815 | 8816 | |||||
| Deferred Paid (over 4 yrs) | 0 | 2195 | 2195 | 3195 | 2195 | |||||
| Loan Notes Repaid (over 4 yrs) | 0 | 0 | 0 | 2000 | 2000 | |||||
| Bank Principal Paid (4 yrs) | £6,341 | £5,707 | £5,707 | £4,566 | £5,137 | |||||
| TOTAL CLEARED BY YEAR 4 | £23,244 | £19,720 | £18,720 | £20,576 | £18,148 | |||||
| % of Deal Price Cleared | 83.0% | 70.4% | 66.9% | 73.5% | 64.8% | |||||
| REMAINING DEBT AFTER YEAR 4 | ||||||||||
| Bank Balance Outstanding | £4,756 | £4,280 | £4,280 | £3,424 | £3,852 | |||||
| Balloon (new bank refi facility) | 0 | 4000 | 5000 | 4000 | 6000 | |||||
| TOTAL ONGOING DEBT (Yr 5 onwards) | £4,756 | £8,280 | £9,280 | £7,424 | £9,852 | |||||
| AFFORDABILITY & RANKING | ||||||||||
| Min DSCR (worst year, Yrs 1-4) | 1.64 | 1.45 | 1.45 | 1.70 | 1.28 | |||||
| Yr 4 DSCR (tightest year) | 1.64 | 1.45 | 1.45 | 1.70 | 1.28 | |||||
| DSCR PASS (all years ≥ 1.25x)? | ✅ PASS | ✅ PASS | ✅ PASS | ✅ PASS | ✅ PASS | |||||
| Rank (by Min DSCR) | 2 | 3 | 3 | 1 | 5 | |||||
| Verdict | ✅ STRONG | ✅ ADEQUATE | ✅ ADEQUATE | ✅ STRONG | ✅ ADEQUATE | |||||
The input sheet drives the entire model. Company details, deal price, funding assumptions, and growth parameters are entered here. Change one input and every downstream calculation updates.
Feasibility Inputs
Deal Structure| ACQUISITION FEASIBILITY REPORT | ||||||
| Funding Assessment & Deal Structuring Tool | ||||||
| £'000 | ||||||
| COMPANY & DEAL INFORMATION | ||||||
| Company Name | Precision Engineering Ltd | |||||
| Sector | Engineering Services | |||||
| Valuation Date | 2025-04-01 00:00:00 | |||||
| Target Acquisition Price (£'000) | 24195 | ← Enterprise Value (user editable) | ||||
| UK Corporation Tax Rate | 25.0% | |||||
| HISTORICAL P&L (3 YEARS) | ||||||
| Revenue | £23,474 | £25,352 | 27000 | Linked from P&L tab | ||
| Cost of Sales | -£15,023 | -£16,225 | -17280 | |||
| Gross Profit | £8,451 | £9,127 | 9720 | |||
| Gross Margin % | 36.0% | 36.0% | 36.0% | |||
| Total Operating Expenses | -£5,282 | -£5,704 | -6021 | |||
| EBITDA | £3,169 | £3,423 | 3699 | |||
| EBITDA Margin % | 13.5% | 13.5% | 13.7% | |||
| Depreciation & Amortisation | -587 | -634 | -675 | |||
| EBIT (Operating Profit) | £2,582 | £2,789 | 3024 | |||
| Interest Expense | -180 | -165 | -150 | |||
| Net Profit After Tax | £1,802 | £1,968 | £2,156 | |||
| Revenue Growth % | n/a | 8.0% | 6.5% | |||
| HISTORICAL BALANCE SHEET (KEY ITEMS) | ||||||
| Total Non-Current Assets | 4850 | 4820 | 4790 | Linked from BS tab | ||
| Trade Receivables | £3,537 | £3,820 | £4,068 | |||
| Inventory | 1850 | 1920 | 2000 | |||
| Cash & Equivalents | 1450 | 1800 | 2200 | |||
| Total Assets | £12,067 | £12,770 | £13,493 | |||
| Total Equity | £4,971 | £5,939 | £6,941 | |||
| Long-Term Borrowings | 2800 | 2500 | 2200 | |||
| Short-Term Borrowings | 350 | 300 | 250 | |||
| Trade Payables | £1,646 | £1,778 | £1,894 | |||
| Total Liabilities | £7,097 | £6,831 | £6,553 | |||
| Net Debt | 1700 | 1000 | 250 | LT Debt + ST Debt - Cash | ||
| Net Debt / EBITDA | 53.6% | 29.2% | 6.8% | |||
| Adjusted EBITDA (normalised) | £3,497 | £3,883 | 4049 | From EBITDA Bridge | ||
| FORECAST ASSUMPTIONS | ||||||
| Revenue CAGR (5yr forecast) | 5.0% | Per existing model | ||||
| Gross Margin % | 36.0% | From FY2025 actual | ||||
| Opex as % of Revenue | 22.3% | From FY2025 actual | ||||
| Depreciation as % of Revenue | 2.5% | Per existing assumptions | ||||
| Capex as % of Revenue | 3.0% | Maintenance + growth | ||||
| Working Capital Increase as % of Rev Growth | 40.0% | % of incremental revenue | ||||
| UK LENDING RATE ASSUMPTIONS | ||||||
| BoE Base Rate | 4.5% | Current BoE rate — user adjustable | ||||
| Bank Margin (over base) | 2.5% | Typical UK SME acquisition margin 2-4% | ||||
| All-In Variable Rate (Base + Margin) | 7.0% | |||||
| Fixed Rate Option | 7.5% | Alternative fixed rate — user adjustable | ||||
| Rate Used in Model | Variable | Enter 'Variable' or 'Fixed' | ||||
| Effective Rate Applied | 7.0% | Auto-calculated from toggle above | ||||
| Bank Loan Term (years) | 7 | Typical UK acquisition loan 5-10 years | ||||
| Max Leverage (Debt / EBITDA) | 3 | UK lender typical max 2.5-3.5x | ||||
A full three-statement projection (P&L, balance sheet, cash flow) across four years, matching the deferred consideration period. This is the acid test: can the business service its acquisition debt?
4-Year Projections
Deal Structure| 4-YEAR PROJECTIONS — FULL 3-STATEMENT MODEL | ||||||
| 4-year forecast from FY2026 matching deferred funding period | ||||||
| £'000 | ||||||
| PROJECTED P&L | ||||||
| Revenue | 27000 | 28350 | £29,768 | £31,256 | £32,819 | |
| Cost of Sales | -17280 | -18144 | -£19,051 | -£20,004 | -£21,004 | |
| Gross Profit | 9720 | 10206 | £10,716 | £11,252 | £11,815 | |
| Operating Expenses | -6021 | -£6,322 | -£6,638 | -£6,970 | -£7,319 | |
| EBITDA | 3699 | £3,884 | £4,078 | £4,282 | £4,496 | |
| EBITDA Margin % | 13.7% | 13.7% | 13.7% | 13.7% | 13.7% | |
| Depreciation & Amortisation | -675 | -709 | -744 | -781 | -820 | |
| EBIT (Operating Profit) | 3024 | £3,175 | £3,334 | £3,501 | £3,676 | |
| Interest Expense (on acquisition debt) | -150 | 0 | 0 | 0 | 0 | |
| Profit Before Tax | 2874 | £3,175 | £3,334 | £3,501 | £3,676 | |
| Taxation | -718 | -794 | -833 | -875 | -919 | |
| Net Profit After Tax | £2,156 | £2,381 | £2,500 | £2,625 | £2,757 | |
| Revenue Growth % | Base | 5.0% | 5.0% | 5.0% | 5.0% | |
| PROJECTED CASH FLOW STATEMENT | ||||||
| EBITDA | 3699 | £3,884 | £4,078 | £4,282 | £4,496 | |
| Less: Tax on EBIT | -756 | -794 | -833 | -875 | -919 | |
| Less: Capex | -810 | -850 | -893 | -938 | -985 | |
| Less: Working Capital Increase | 0 | -540 | -567 | -595 | -625 | |
| Unlevered Free Cash Flow (UFCF) | 2133 | £1,700 | £1,785 | £1,874 | £1,968 | |
| Less: Interest Expense | -150 | 0 | 0 | 0 | 0 | |
| Tax Shield on Interest | 37.50 | 0 | 0 | 0 | 0 | |
| Levered Free Cash Flow (LFCF) | £2,020 | £1,700 | £1,785 | £1,874 | £1,968 | |
| LFCF Margin % | 7.5% | 6.0% | 6.0% | 6.0% | 6.0% | |
| Cumulative UFCF (4yr) | £1,700 | £3,484 | £5,358 | £7,326 | ||
| Cumulative LFCF (4yr) | £1,700 | £3,484 | £5,358 | £7,326 | ||
UK lender criteria mapped against the deal numbers. Maximum borrowing capacity, debt service cover ratios, and interest cover — all tested against real-world banking covenants.
Funding Feasibility
Deal Structure| FUNDING FEASIBILITY ASSESSMENT | ||||||
| UK Lender Criteria & Maximum Borrowing Assessment | ||||||
| KEY INPUTS SUMMARY | ||||||
| Target Acquisition Price (£'000) | 24195 | Min DSCR | 1.25 | |||
| FY2025 EBITDA (£'000) | 3699 | Min Interest Cover | 2 | |||
| Adj. EBITDA (normalised) (£'000) | 4049 | Max Debt / EBITDA | 3 | |||
| Effective Interest Rate | 7.0% | Max Debt / Adj. EBITDA | 3.50 | |||
| Loan Term (years) | 7 | Max LTV (Loan to Value) | 70.0% | |||
| Avg Projected EBITDA (4yr) | £4,185 | |||||
| 4yr Cumulative UFCF | £7,326 | |||||
| MAXIMUM BORROWING CAPACITY | ||||||
| Based on Leverage (Debt/EBITDA) | 11097 | 3.0x × EBITDA of 3,699 | ||||
| Based on Adj. EBITDA Leverage | £14,172 | 3.5x × Adj. EBITDA of 4,049 | ||||
| Based on LTV | £16,936 | 70% of acquisition price 24,195 | ||||
| Based on DSCR (annual repayment capacity) | £23,436 | EBITDA ÷ Min DSCR × Term | ||||
| MAXIMUM SENIOR DEBT (binding constraint) | 11097 | Binding: Leverage | ||||
| Equity / Cash Required (Gap) | 13098 | Acquisition price less max debt | ||||
| Annual Debt Service (P+I) | £2,362 | Principal repayment + interest | ||||
| Implied DSCR | 1.77 | ✅ PASS (>1.25x) | ||||
| Implied Interest Cover (EBITDA/Interest) | 5.39 | ✅ PASS (>2.00x) | ||||
| Debt / EBITDA | 3 | ✅ PASS (≤3.0x) | ||||
| OVERALL VERDICT | ||||||
| Bank Funding Available? | ✅ YES | |||||
| Max Senior Debt (£'000) | 11097 | 45.9% of deal funded by bank | ||||
| Equity / Other Funding Needed (£'000) | 13098 | 54.1% to be covered by other sources | ||||
| Funding Gap as Multiple of EBITDA | 3.54 | |||||
Three years of profit and loss history (FY2023–FY2025). The narrative runs from revenue through gross profit, EBITDA, and net income — tracking margin progression and identifying where value is created.
P&L
Financial Model| PROFIT & LOSS STATEMENT | |||||
| Precision Engineering Ltd | |||||
| £'000 | |||||
| Revenue | £23,474 | £25,352 | 27000 | Per Assumptions | |
| Cost of Sales | -£15,023 | -£16,225 | -17280 | Gross margin per Assumptions | |
| Gross Profit | £8,451 | £9,127 | 9720 | ||
| Gross Margin % | 36.0% | 36.0% | 36.0% | ||
| Operating Expenses | |||||
| Admin & Management Staff | -£2,934 | -£3,169 | -3321 | Largest opex - labour intensive | |
| Premises & Facilities | -£1,056 | -£1,141 | -1215 | ||
| Professional & Legal | -352 | -380 | -405 | ||
| Insurance | -188 | -203 | -216 | ||
| Other Operating Costs | -751 | -811 | -864 | ||
| Total Operating Expenses | -£5,282 | -£5,704 | -6021 | ||
| EBITDA | £3,169 | £3,423 | 3699 | ||
| EBITDA Margin % | 13.5% | 13.5% | 13.7% | ||
| Depreciation & Amortisation | -587 | -634 | -675 | ||
| EBIT (Operating Profit) | £2,582 | £2,789 | 3024 | ||
| EBIT Margin % | 11.0% | 11.0% | 11.2% | ||
| Interest Expense | -180 | -165 | -150 | Declining with debt repayment | |
| Profit Before Tax (PBT) | £2,402 | £2,624 | 2874 | ||
| Taxation | -601 | -656 | -718 | 25% UK Corp Tax | |
| Net Profit After Tax | £1,802 | £1,968 | £2,156 | ||
| Net Margin % | 7.7% | 7.8% | 8.0% | ||
| Revenue Growth % | n/a | 8.0% | 6.5% | ||
The bridge from reported to adjusted EBITDA. Add-backs are itemised and categorised. This is where deals are won or lost — if the adjustments don't survive diligence, value compresses immediately.
EBITDA Bridge
Financial Model| EBITDA BRIDGE & NORMALISATION ANALYSIS | |||||
| Reconciliation from Reported to Adjusted EBITDA | |||||
| £'000 | |||||
| REPORTED EBITDA | £3,169 | £3,423 | 3699 | Per P&L Statement | |
| EBITDA Margin % | 13.5% | 13.5% | 13.7% | ||
| OWNER / DIRECTOR ADD-BACKS | |||||
| Excess Owner Compensation | 120 | 130 | 140 | MD salary above market rate (£180k vs £40k market) | |
| Owner Vehicle & Benefits | 35 | 35 | 38 | Personal vehicle, phone, travel | |
| Owner Pension (Excess) | 25 | 25 | 30 | Contributions above standard employer rate | |
| Spouse on Payroll (Non-Working) | 30 | 30 | 30 | Tax planning — no operational role | |
| Subtotal Owner Add-Backs | 210 | 220 | 238 | ||
| NON-RECURRING / ONE-OFF ITEMS | |||||
| Restructuring Costs | 0 | 85 | 0 | FY24: Workshop reorganisation | |
| Legal & Settlement Costs | 45 | 0 | 0 | FY23: Customer dispute settlement | |
| Aborted M&A / Transaction Costs | 0 | 0 | 65 | FY25: Aborted acquisition target DD | |
| COVID-Related Catch-Up Costs | 60 | 0 | 0 | FY23: Deferred maintenance catch-up | |
| Bad Debt Write-Off (Exceptional) | 0 | 120 | 0 | FY24: Single customer insolvency | |
| Subtotal One-Off Add-Backs | 105 | 205 | 65 | ||
| PROPERTY & RELATED-PARTY ADJUSTMENTS | |||||
| Below-Market Rent Adjustment | -45 | -45 | -45 | Premises owned by MD — rent £45k below market | |
| Related-Party Contract (Arm's Length) | 0 | 0 | 0 | No adjustment required — at market rate | |
| Subtotal Property Adjustments | -45 | -45 | -45 | ||
| OTHER NORMALISATION ADJUSTMENTS | |||||
| R&D Expenditure (Capitalisation Adj) | 50 | 55 | 60 | R&D expensed but has future economic benefit | |
| Share-Based Compensation | 0 | 15 | 20 | Non-cash charge, add back | |
| Donated / Charitable Items | 8 | 10 | 12 | Discretionary charitable donations | |
| Subtotal Other Adjustments | 58 | 80 | 92 | ||
| TOTAL ADD-BACKS | 328 | 460 | 350 | ||
| ADJUSTED EBITDA | £3,497 | £3,883 | 4049 | ||
| Adjusted EBITDA Margin % | 14.9% | 15.3% | 15.0% | ||
| Uplift from Reported | 10.4% | 13.4% | 9.5% | ||
| ADJUSTED EBITDA VALUATION IMPACT | |||||
| Reported EBITDA × Applied Multiple | £30,265 | (3,699 × 8.2x) | |||
| Adjusted EBITDA × Applied Multiple | £33,128 | (4,049 × 8.2x) | |||
| INCREMENTAL VALUE FROM ADD-BACKS | £2,864 | Additional value unlocked | |||
| Incremental Value % | 9.5% | ||||
| EBITDA Bridge Chart Data (FY2025) | £'000 | ||||
| Reported EBITDA | 3699 | ||||
| Owner Add-Backs | 238 | ||||
| One-Off Items | 65 | ||||
| Property Adj | -45 | ||||
| Other Adj | 92 | ||||
| Adjusted EBITDA | 4049 | ||||
A full balance sheet across three years. The key focus for acquisition screening: net debt composition, working capital levels, and any debt-like items that reduce equity value.
Balance Sheet
Financial Model| BALANCE SHEET | |||||
| Precision Engineering Ltd | |||||
| £'000 | |||||
| NON-CURRENT ASSETS | |||||
| Property, Plant & Equipment | 3200 | 3350 | 3500 | Plant, machinery, workshop | |
| Intangible Assets | 450 | 420 | 390 | Software, IP, development costs | |
| Right-of-Use Assets | 1200 | 1050 | 900 | IFRS 16 lease assets | |
| Total Non-Current Assets | 4850 | 4820 | 4790 | ||
| CURRENT ASSETS | |||||
| Trade Receivables | £3,537 | £3,820 | £4,068 | Revenue × Debtor days / 365 | |
| Inventory | 1850 | 1920 | 2000 | WIP, raw materials, finished goods | |
| Prepayments & Other Receivables | 380 | 410 | 435 | ||
| Cash & Cash Equivalents | 1450 | 1800 | 2200 | Growing cash position | |
| Total Current Assets | £7,217 | £7,950 | £8,703 | ||
| TOTAL ASSETS | £12,067 | £12,770 | £13,493 | ||
| EQUITY | |||||
| Share Capital | 100 | 100 | 100 | ||
| Retained Earnings | £4,871 | £5,839 | £6,841 | Opening + Net Profit | |
| Total Equity | £4,971 | £5,939 | £6,941 | ||
| NON-CURRENT LIABILITIES | |||||
| Long-Term Borrowings | 2800 | 2500 | 2200 | Reducing via repayments | |
| Lease Liabilities (Non-Current) | 950 | 800 | 650 | IFRS 16 | |
| Deferred Tax Liability | 180 | 195 | 210 | ||
| Total Non-Current Liabilities | 3930 | 3495 | 3060 | ||
| CURRENT LIABILITIES | |||||
| Trade Payables | £1,646 | £1,778 | £1,894 | COGS × Creditor days / 365 | |
| Accruals & Other Payables | 620 | 680 | 740 | ||
| Short-Term Borrowings | 350 | 300 | 250 | Revolving credit facility | |
| Corporation Tax Payable | 300 | 328 | 359 | ~50% of tax charge unpaid at YE | |
| Lease Liabilities (Current) | 250 | 250 | 250 | ||
| Total Current Liabilities | £3,167 | £3,336 | £3,493 | ||
| TOTAL LIABILITIES | £7,097 | £6,831 | £6,553 | ||
| TOTAL EQUITY + LIABILITIES | £12,067 | £12,770 | £13,493 | ||
| Balance Check (Assets - E&L) | 0 | 0 | 0 | Should be zero | |
| NET ASSET VALUE ANALYSIS | |||||
| Total Assets | £12,067 | £12,770 | £13,493 | ||
| Less: Total Liabilities | -£7,097 | -£6,831 | -£6,553 | ||
| Net Asset Value (NAV) | £4,971 | £5,939 | £6,941 | Should equal Total Equity | |
| Tangible NAV (excl. Intangibles) | £4,521 | £5,519 | £6,551 | NAV less goodwill, IP, software | |
| NAV per Share (£) | £4,971 | £5,939 | £6,941 | Based on Share Capital as proxy | |
| Net Debt | 1700 | 1000 | 250 | LT Debt + ST Debt − Cash | |
| Net Debt / Equity | 34.2% | 16.8% | 3.6% | Declining → strengthening balance sheet | |
| Enterprise Value / NAV | 3.49 | How much premium over book value | |||
| Working Capital | £4,051 | £4,614 | £5,211 | Current Assets − Current Liabilities | |
Thirteen financial ratios interpreted through an acquisition lens. Each ratio is assessed for what it tells a buyer (the benefit) and what could go wrong (the diligence test).
Ratios & Statistics
Financial Model| RATIOS, STATISTICS & ANALYTICAL REVIEW | |||||
| Precision Engineering Ltd — 3-Year Trend Analysis | |||||
| PROFITABILITY RATIOS | |||||
| Gross Profit Margin | 36.0% | 36.0% | 36.0% | → Stable | |
| EBITDA Margin | 13.5% | 13.5% | 13.7% | ↑ Improving | |
| EBIT Margin | 11.0% | 11.0% | 11.2% | ↑ Improving | |
| Net Profit Margin | 7.7% | 7.8% | 8.0% | ↑ Improving | |
| Return on Equity (ROE) | 36.2% | 33.1% | 31.1% | ↓ Declining | |
| Return on Assets (ROA) | 14.9% | 15.4% | 16.0% | ↑ Improving | |
| Return on Capital Employed (ROCE) | 31.8% | 31.9% | 32.2% | ↑ Improving | |
| Revenue per Employee (£'000) | 138 | 142 | 146 | FY23: 170, FY24: 178, FY25: 185 staff | |
| EBITDA per Employee (£'000) | 18.64 | 19.23 | 19.99 | ↑ Improving | |
| Adjusted EBITDA Margin | 14.9% | 15.3% | 15.0% | ↑ Improving | |
| LIQUIDITY & SOLVENCY RATIOS | |||||
| Current Ratio | 2.28 | 2.38 | 2.49 | >1.5x healthy; >2.0x strong | |
| Quick Ratio (Acid Test) | 1.69 | 1.81 | 1.92 | >1.0x adequate | |
| Cash Ratio | 45.8% | 54.0% | 63.0% | >0.5x comfortable | |
| Debt-to-Equity | 63.4% | 47.1% | 35.3% | <1.0x conservative | |
| Net Debt / EBITDA | 53.6% | 29.2% | 6.8% | <2.0x bankable; <3.0x acceptable | |
| Interest Coverage (EBITDA/Interest) | 17.61 | 20.74 | 24.66 | >4.0x strong debt serviceability | |
| Gearing (Debt/Total Capital) | 38.8% | 32.0% | 26.1% | <40% conservative | |
| Equity Ratio | 41.2% | 46.5% | 51.4% | >50% well-capitalised | |
| Debt Service Coverage Ratio | 6.60 | 7.36 | 8.22 | EBITDA / (Interest + Principal repay £300k) | |
| EFFICIENCY & WORKING CAPITAL | |||||
| Trade Receivable Days | 55.00 | 55 | 55 | Target: 55 days (per Assumptions) | |
| Trade Payable Days | 40 | 40 | 40 | Target: 40 days (per Assumptions) | |
| Inventory Days | 44.95 | 43.19 | 42.25 | WIP + raw materials + finished goods | |
| Cash Conversion Cycle (days) | 59.95 | 58.19 | 57.25 | Receivable + Inventory - Payable days | |
| Asset Turnover | 1.95 | 1.99 | 2.00 | Revenue / Total Assets | |
| Fixed Asset Turnover | 4.84 | 5.26 | 5.64 | Revenue / Non-Current Assets | |
| Working Capital (£'000) | £4,051 | £4,614 | £5,211 | Current Assets − Current Liabilities | |
| DUPONT ANALYSIS (ROE DECOMPOSITION) | |||||
| Net Profit Margin | 7.7% | 7.8% | 8.0% | Profitability component | |
| Asset Turnover | 1.95 | 1.99 | 2.00 | Efficiency component | |
| Equity Multiplier (Assets/Equity) | 2.43 | 2.15 | 1.94 | Leverage component | |
| ROE (= Margin × Turnover × Multiplier) | 36.2% | 33.1% | 31.1% | Cross-check: should match ROE above | |
| ALTMAN Z-SCORE (PRIVATE COMPANY) | |||||
| X1: Working Capital / Total Assets | 33.6% | 36.1% | 38.6% | × 0.717 | |
| X2: Retained Earnings / Total Assets | 40.4% | 45.7% | 50.7% | × 0.847 | |
| X3: EBIT / Total Assets | 21.4% | 21.8% | 22.4% | × 3.107 | |
| X4: Book Equity / Total Liabilities | 70.0% | 86.9% | 1.06 | × 0.420 | |
| X5: Revenue / Total Assets | 1.95 | 1.99 | 2.00 | × 0.998 | |
| ALTMAN Z-SCORE | 3.48 | 3.67 | 3.84 | ✅ Safe Zone (>2.9) | |
| GROWTH & VALUE METRICS | |||||
| Revenue Growth YoY | n/a | 8.0% | 6.5% | ||
| EBITDA Growth YoY | n/a | 8.0% | 8.1% | ||
| Net Profit Growth YoY | n/a | 9.2% | 9.5% | ||
| 2-Year Revenue CAGR (FY23-FY25) | 7.2% | Compound annual growth rate | |||
| Book Value per Share (£'000) | £4,971 | £5,939 | £6,941 | Equity / Share Capital × 100 | |
| Net Asset Value (£'000) | £4,971 | £5,939 | £6,941 | Total Equity (book value) | |
| Ratio Chart Data | FY2023 | FY2024 | FY2025 | ||
| Gross Margin | 36.0% | 36.0% | 36.0% | ||
| EBITDA Margin | 13.5% | 13.5% | 13.7% | ||
| Net Margin | 7.7% | 7.8% | 8.0% | ||
Five-year forward projections underpinning the DCF valuation. Revenue growth, margin assumptions, working capital intensity, and capex — the variables that drive enterprise value.
Forecast
Financial Model| 5-YEAR BUSINESS FORECAST | |||||||
| Based on 5% Revenue CAGR from FY2025 base | |||||||
| £'000 | |||||||
| Revenue | 27000 | 28350 | £29,768 | £31,256 | £32,819 | £34,460 | |
| Revenue Growth % | Base | 5.0% | 5.0% | 5.0% | 5.0% | 5.0% | |
| Cost of Sales | -17280 | -18144 | -£19,051 | -£20,004 | -£21,004 | -£22,054 | |
| Gross Profit | 9720 | 10206 | £10,716 | £11,252 | £11,815 | £12,405 | |
| Gross Margin % | 36.0% | 36.0% | 36.0% | 36.0% | 36.0% | 36.0% | |
| Total Operating Expenses | -6021 | -£6,322 | -£6,638 | -£6,970 | -£7,319 | -£7,684 | |
| EBITDA | 3699 | £3,884 | £4,078 | £4,282 | £4,496 | £4,721 | |
| EBITDA Margin % | 13.7% | 13.7% | 13.7% | 13.7% | 13.7% | 13.7% | |
| Depreciation & Amortisation | -675 | -709 | -744 | -781 | -820 | -861 | |
| EBIT | 3024 | £3,175 | £3,334 | £3,501 | £3,676 | £3,859 | |
| Interest Expense | -150 | -142 | -149 | -156 | -164 | -172 | |
| Profit Before Tax | 2874 | £3,033 | £3,185 | £3,344 | £3,512 | £3,687 | |
| Taxation | -718 | -758 | -796 | -836 | -878 | -922 | |
| Net Profit | £2,156 | £2,275 | £2,389 | £2,508 | £2,634 | £2,765 | |
| Net Margin % | 8.0% | 8.0% | 8.0% | 8.0% | 8.0% | 8.0% | |
| Free Cash Flow Proxy | |||||||
| EBITDA | 3699 | £3,884 | £4,078 | £4,282 | £4,496 | £4,721 | |
| Less: Tax on EBIT | -756 | -794 | -833 | -875 | -919 | -965 | |
| Less: Capex | -810 | -850 | -893 | -938 | -985 | -£1,034 | |
| Less: Working Capital Increase | -540 | -567 | -595 | -625 | -656 | -689 | |
| Unlevered Free Cash Flow (UFCF) | 1593 | £1,673 | £1,756 | £1,844 | £1,936 | £2,033 | |
| Chart Data | FY2025 | FY2026F | FY2027F | FY2028F | FY2029F | FY2030F | |
| Revenue | 27000 | 28350 | £29,768 | £31,256 | £32,819 | £34,460 | |
| EBITDA | 3699 | £3,884 | £4,078 | £4,282 | £4,496 | £4,721 | |
The discounted cash flow model. Unlevered free cash flow is projected, a terminal value calculated using Gordon Growth, and all cash flows discounted at WACC to arrive at enterprise value.
DCF Valuation
Valuation| DCF VALUATION MODEL | |||||||
| Discounted Cash Flow Analysis | |||||||
| £'000 | |||||||
| Unlevered Free Cash Flow | £1,673 | £1,756 | £1,844 | £1,936 | £2,033 | ||
| Terminal Value (Gordon Growth) | £27,786 | ||||||
| Discount Factor | 90.9% | 82.6% | 75.1% | 68.3% | 62.1% | 62.1% | |
| PV of Cash Flows | £1,521 | £1,451 | £1,385 | £1,323 | £1,262 | £17,253 | |
| Sum of PV of FCFs | £6,942 | ||||||
| PV of Terminal Value | £17,253 | ||||||
| Enterprise Value (DCF) | £24,195 | ||||||
| ENTERPRISE VALUE TO EQUITY VALUE BRIDGE | |||||||
| Enterprise Value (DCF) | £24,195 | ||||||
| Less: Total Debt | -2450 | ||||||
| Less: Lease Liabilities | -900 | ||||||
| Add: Cash & Cash Equivalents | 2200 | ||||||
| Equity Value (DCF) | £23,045 | ||||||
| Implied EV/EBITDA | 6.54 | ||||||
| Implied EV/Revenue | 89.6% | ||||||
| SENSITIVITY ANALYSIS: Enterprise Value (£'000) | |||||||
| WACC \ Terminal Growth | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% | ||
| 8.0% | £28,932 | £30,848 | £33,113 | £35,830 | £39,151 | ||
| 9.0% | £25,013 | £26,384 | £27,967 | £29,814 | £31,996 | ||
| 10.0% | £22,017 | £23,038 | £24,195 | £25,518 | £27,044 | ||
| 11.0% | £19,654 | £20,437 | £21,312 | £22,297 | £23,413 | ||
| 12.0% | £17,742 | £18,358 | £19,038 | £19,793 | £20,638 | ||
| 13.0% | £16,164 | £16,657 | £17,197 | £17,791 | £18,447 | ||
| 14.0% | £14,840 | £15,241 | £15,677 | £16,153 | £16,674 | ||
Market multiple cross-check using listed UK engineering peers (Bodycote, Spirax, IMI, Renishaw, Spectris, Halma). Multiples are applied with a private company discount to anchor the range.
Comparable Analysis
Valuation| COMPARABLE COMPANY ANALYSIS | |||||
| Market Multiple Approach | |||||
| Comparable Companies | Revenue (£m) | EBITDA (£m) | EV (£m) | EV/Revenue | EV/EBITDA |
| Bodycote plc | 743 | 204 | 1780 | 2.40 | 8.73 |
| Spirax Group plc | 1630 | 396 | 7200 | 4.42 | 18.18 |
| IMI plc | 2100 | 420 | 6500 | 3.10 | 15.48 |
| Renishaw plc | 688 | 152 | 3200 | 4.65 | 21.05 |
| Rotork plc | 615 | 158 | 3100 | 5.04 | 19.62 |
| Mean | 3.92 | 16.61 | |||
| Median | 4.42 | 18.18 | |||
| VALUATION APPLICATION | |||||
| EV/Revenue | EV/EBITDA | ||||
| Size/Liquidity Discount | 25.0% | 45.0% | Discount for SME vs listed peers | ||
| Applied Multiple (Median × Discount) | 1.10 | 8.18 | |||
| Subject Company Metrics (£'000) | |||||
| FY2025 Revenue | 27000 | ||||
| FY2025 EBITDA | 3699 | ||||
| Implied Enterprise Value (£'000) | £29,816 | £30,265 | |||
| Equity Value (£'000) | £28,666 | £29,115 | |||
| Valuation Summary (£'000) | |||||
| Methodology | Enterprise Value | Equity Value | |||
| DCF (Base Case) | £24,195 | £23,045 | |||
| EV/Revenue (Comps) | £29,816 | £28,666 | |||
| EV/EBITDA (Comps) | £30,265 | £29,115 | |||
| Valuation Range | £24,195 - £30,265 | £23,045 - £29,115 | |||
Every assumption in one place. Revenue growth rates, margin targets, capex as a percentage of revenue, WACC, terminal growth — all transparent and auditable.
Assumptions
Valuation| 7.5% | ||||
| Company Overview | Value | Unit | Notes | |
|---|---|---|---|---|
| Company Name | Precision Engineering Ltd | Test case - illustrative data | ||
| Sector | Engineering Services | |||
| FY2025 Revenue | 27000000 | £ | Base year turnover | |
| Valuation Date | 2025-03-31 00:00:00 | |||
| Revenue Assumptions | ||||
| Revenue CAGR (Forecast) | 5.0% | % | Per client instruction | |
| Historical Revenue Growth (FY23-24) | 8.0% | % | Assumed historical | |
| Historical Revenue Growth (FY24-25) | 6.5% | % | Assumed historical | |
| P&L Margin Assumptions | ||||
| Gross Margin | 36.0% | % | Engineering sector typical 33-40% | |
| EBITDA Margin | 13.5% | % | Mid-range for engineering | |
| Depreciation (% of Revenue) | 2.5% | % | Asset-moderate business | |
| Interest Rate on Debt | 5.5% | % | Current market rate | |
| Effective Tax Rate | 25.0% | % | UK Corporation Tax | |
| Valuation Assumptions | ||||
| WACC (Discount Rate) | 10.0% | % | SME engineering risk premium | |
| Terminal Growth Rate | 2.5% | % | Long-term GDP proxy | |
| EV/EBITDA Multiple (Comparable) | 7.50 | x | Engineering sector median | |
| EV/Revenue Multiple (Comparable) | 1 | x | Engineering sector median | |
| Balance Sheet Assumptions | ||||
| Trade Receivable Days | 55 | days | Engineering sector typical | |
| Trade Payable Days | 40 | days | Standard terms | |
| Capex (% of Revenue) | 3.0% | % | Maintenance + growth capex |
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