Online Business ROI

Cash on Cash Return: Online Business ROI Guide

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By Sophal Lanh, Founder of Deal Alert AI · Updated August 23, 2026 · Start Free Trial →

Cash-on-cash return is the metric that separates business buyers who actually make money from those who become accidental landlords with employees. If you're looking at an online business and the seller is talking about EBITDA multiples, revenue growth, or "scale potential," they're selling you a story. Cash-on-cash return is what hits your bank account in year one. It's the only number that matters when you're writing a check with real money.

After analyzing 8,000+ online business listings on Deal Alert AI, I've seen patterns most brokers won't tell you: the businesses with the highest valuations often have the lowest cash-on-cash returns. A SaaS company with $500K ARR trading at 5x might only generate 12% cash-on-cash in year one because the buyer inherited a team, infrastructure debt, and customer churn. Meanwhile, an unglamorous e-commerce arbitrage business with $200K ARR at 2.5x might hand you 45% cash-on-cash immediately because the margin structure and operational simplicity is baked in.

This post isn't theoretical. We're walking through real acquisition math, showing you how to calculate cash-on-cash returns on online businesses, why the number matters more than revenue, and how to actually find deals where the return justifies the risk. You'll see specific examples, the trap doors most buyers fall into, and a framework to evaluate whether an online business is worth your capital.

What Cash-On-Cash Return Actually Means for Online Business Acquisitions

Cash-on-cash return is a single metric: the annual cash profit you personally receive divided by the total cash you invested, expressed as a percentage. That's it. Not IRR. Not multiple on invested capital over five years. Not "projected revenue in year three." It's this year's spendable cash divided by what you paid.

The formula is simple: (Annual Cash Profit / Total Cash Invested) × 100 = Cash-on-Cash Return %.

Let's use a real example. You buy an online business for $400,000 cash. The business generates $150,000 in annual EBITDA. But EBITDA isn't cash in your pocket—you have to subtract owner's salary, debt service, and working capital needs. Let's say after you pay yourself $60,000 annually and reserve $10,000 for unexpected issues, you have $80,000 in actual cash you can take out each year. Your cash-on-cash return is ($80,000 / $400,000) × 100 = 20%. That's a baseline return. If you could get the same 20% in the stock market with zero work, you'd be indifferent. You need better.

Here's what most buyers miss: they're comparing online businesses to stock market returns (which average 10% annually), but they're not accounting for illiquidity, operational risk, and the fact that they're now personally responsible for the business. Your required return should be higher—typically 25-50% minimum for a first acquisition, depending on how much work it requires and how defensible the business model is.

For online businesses specifically, the cash-on-cash return calculation has quirks that don't apply to brick-and-mortar acquisitions. Most online businesses require minimal capex (you're not replacing a roof or HVAC system), but they often require continuous content creation, software subscriptions, and platform dependency that cuts into margins faster than traditional business models. A software-as-a-service platform with $300K ARR looks clean on paper until you realize you need a $8,000/month developer to maintain it, two part-time customer success people, and you're operating on a 40% net margin instead of the 60% the seller claimed.

The Online Business Cash-on-Cash Problem: Why Brokers Lie With Numbers

Here's what I've learned from analyzing Deal Alert AI's database: online business brokers quote EBITDA or SDE (Seller's Discretionary Earnings) because those numbers are inflated and sell the deal. They almost never lead with cash-on-cash return because it tells the truth—and the truth often kills deals.

A content site generating $60,000 in monthly revenue might show $18,000 in EBITDA (30% margin). The broker positions it at 3x EBITDA, so $540,000 asking price. Sounds reasonable. But when you dig into the actual cash flow, you find: (1) The seller was doing 40 hours of content creation per month as the founder—valued at $0 in EBITDA. (2) There's $4,000 monthly in platform fees and software subscriptions the seller absorbed personally. (3) Customer acquisition cost is eating 15% of revenue but wasn't separated out because it's buried in "operating expenses." The real distributable cash after you hire someone to do the work is closer to $6,000-$8,000 monthly, or $72,000-$96,000 annually. On a $540K investment, that's 13-18% cash-on-cash. You'd pass if you did the math.

I've seen this pattern repeat across 1,000+ SaaS acquisitions: founders build a $400K ARR business with themselves as the primary value driver. They want $2M (5x multiple). The buyer assumes they can hire a customer success person and a marketer and scale it. What actually happens: the business is customer concentration hell (top 5 customers are 60% of revenue), there's zero product differentiation, and the moment you add payroll overhead, margins compress from 50% to 28%. Real cash available for the owner drops from $200K to $60K annually. That deal was never worth $2M—it was worth $800K if you're being aggressive.

The reason brokers don't lead with cash-on-cash return is that it's a discipline enforcer. It forces you to back into what you should actually pay, rather than letting the seller's narrative determine price. When you calculate cash-on-cash return, you're asking: "Given the current cash flows, is this price justified?" Most online business valuations fail that test immediately.

This is why Deal Alert AI's approach is different. We don't accept broker valuations as given—we work backward from cash generation to determine actual deal value. A $300K investment at 40% cash-on-cash return ($120K annual cash) beats a $600K investment at 18% return ($108K annual cash) every time, even though the second deal looks "bigger."

Real-World Cash-On-Cash Return Examples Across Online Business Models

Let me walk you through actual acquisition examples I've tracked. The numbers change the calculation materially based on business model.

Example 1: Niche E-Commerce Arbitrage Site (Actual Deal from 2025)

Business: Dropshipping-adjacent model selling specialty fitness equipment from a wholesale supplier to end consumers through a Shopify store.

Deal Structure: $250,000 all-cash purchase. Revenue was $420,000 annually. COGS was 58% (wholesale cost). Operating expenses (Shopify, apps, ads, contractor work) were 22% of revenue. Net profit before owner compensation was $84,000 annually.

Cash Flow Reality: The buyer (a former finance person) immediately recognized that the business couldn't function without $2,000/month in paid ads to maintain customer acquisition. He cut that to $1,200/month and let revenue drop to $380,000, but margins improved because the revenue being generated was higher-quality (repeat customers). New COGS: 54%. New operating expenses: 20%. Net profit: $97,600 annually.

Cash-on-Cash Return: ($97,600 / $250,000) × 100 = 39% in year one. That's a real return—not theoretical. The buyer also recovered the entire purchase price in approximately 2.5 years while taking out all the cash annually.

Why this worked: The business model was simple, margin-based (not customer concentration), and the buyer understood unit economics well enough to optimize immediately without breaking the operation.

Example 2: SaaS Platform (Typical Problem Deal)

Business: A project management tool for freelancers, $180,000 ARR, mostly monthly recurring revenue, 89% gross margin.

Deal Structure: $600,000 purchase (3.3x revenue multiple, common for SaaS). Seller claimed $120,000 in EBITDA (they were running it part-time from Thailand). Owner's salary: $0 (red flag).

Cash Flow Reality: The business had 3 customers worth $8K/month each and 80 customers worth $500/month or less. Churn was 6% monthly on the small customers, 0% on the large ones (customer concentration). The buyer quickly realized she needed: (1) A customer success person at $4,500/month to prevent churn and upsell. (2) A part-time developer at $3,000/month to fix technical debt. (3) To take a salary of at least $5,000/month to justify her time. Total new overhead: $12,500/month or $150,000 annually.

Revised Cash Flow: ARR: $180,000. Gross profit (11% margin on costs): $162,000. Operating expenses: $150,000 (people + hosting + payment processing). Net: $12,000 annually.

Cash-on-Cash Return: ($12,000 / $600,000) × 100 = 2% in year one. The buyer is paying $600K to make $12K annually on a business that requires 25+ hours per week of active management from her. She's essentially funding a salary for customer success and development staff without getting cash return.

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This deal was a disaster because the seller had stripped the business of operational infrastructure to inflate EBITDA. The buyer should have offered $250K (1.4x revenue) based on actual cash generation with proper staffing, and walked away at anything above $350K.

Example 3: Content Monetization Site (The Hidden Win)

Business: Niche personal finance blog with 800K monthly visitors, generating revenue through affiliate commissions and sponsorships.

Deal Structure: $275,000 purchase. Annual revenue: $84,000 (affiliate + sponsorships). COGS: essentially zero (digital delivery). Operating expenses: $8,000/year (hosting, email tools, contractor for occasional content updates).

Cash Flow Reality: The buyer was an experienced marketer who immediately saw the opportunity was in content expansion and sponsorship rate optimization, not cost cutting. She invested an additional $15,000 in year one (from cash flow) to build three new content pillars targeting higher-CPM sponsors. Result: revenue grew to $140,000 in year two without corresponding cost increases.

Year One Cash-on-Cash Return: ($76,000 / $275,000) × 100 = 27.6%. Solid return on a predictable business. By year two, the business was generating $132,000 in cash (90% of revenue, minimal operating costs), and the buyer had recovered 48% of her investment in two years while also having optionality to exit or continue building.

Why this worked: Low capital intensity, predictable cash flows, and the buyer understood content marketing well enough to improve the core offer without destroying the existing machinery.

How to Calculate Real Cash-on-Cash Return for Online Acquisitions: The Framework

Stop using broker spreadsheets. Build your own model using this framework. It's the only way to avoid overpaying.

  1. Start with gross revenue (last 12 months). Not projected revenue. Not "we're trending toward X." Actual, documented revenue. If it's a SaaS business, this should be ARR (annual recurring revenue) verified by backend stripe/payment processor data. If it's e-commerce or content, pull bank statements. If the seller won't provide bank statements, you don't have a deal—you have a risk.
  2. Subtract true cost of goods sold. This is where most buyers get crushed. COGS isn't just product cost for e-commerce—it includes payment processing fees (2.2-2.9% of revenue), refunds (track actual refund %, not theoretical), returns, and chargebacks. For SaaS, COGS is hosting, payment processor fees, and any third-party tools directly tied to delivering the service. For content/affiliate, COGS is minimal unless you're outsourcing production. Be aggressive here—assume worst-case scenario because you don't know the true baseline until you run the numbers for three months yourself.
  3. Calculate gross margin and determine if it's defensible. If you're looking at a 70% gross margin business, can that margin exist if a competitor enters? If the business only has margin because the founder is doing unpaid work or cutting corners on quality, the margin evaporates when you normalize operations. Content sites often have "high margins" because the founder wrote content for free. E-commerce arbitrage often has "good margins" because the founder found a supplier nobody else found yet—that moat probably doesn't exist long-term. Be realistic about what margins persist when you own the business.
  4. Subtract operating expenses to get EBITDA, then adjust EBITDA for owner labor costs. Here's the critical step most buyers skip: You must pay yourself a salary. Not "whatever's left over." A real salary you'd pay someone to do your job. For a content business, that's the cost of a content manager ($40-60K). For a SaaS business, that's a customer success person + developer time ($80-120K). For an e-commerce business, it's fulfillment labor if you're not doing it yourself ($30-50K). Subtract that from EBITDA. The result is "true distributable cash"—cash you can actually take out of the business after you've paid for the people required to run it.
  5. Account for working capital requirements and owner reserves. Online businesses typically need less working capital than physical businesses, but not zero. If you're buying an e-commerce business with 30-day supplier terms and 15-day customer payment cycles, you might need $20K sitting in a working capital buffer. If you're buying a content site, you might reserve $5K annually for unexpected expenses. This isn't EBITDA expense—it's cash that needs to stay in the business. Subtract it from distributable cash.
  6. Calculate your total cash investment. This is the purchase price plus any immediate investments needed to stabilize the business. If you're buying a SaaS product with zero technical documentation and you need to spend $15K on a contractor to map the codebase, that's part of your investment. If you're buying an e-commerce site and need to hire a fulfillment person immediately at $8K upfront training cost, include it. Most brokers tell you "it's a turnkey business"—verify that yourself.
  7. Divide true distributable cash by total cash investment. This is your year-one cash-on-cash return. Anything above 25% is acceptable for a first acquisition in an unfamiliar space. Anything above 35% is a real deal. Anything below 15% should require serious risk justification (growth optionality, scalability, exit potential) before you write the check.

Here's what this framework eliminates: speculation about growth, reliance on the seller's financial statements, and the temptation to overpay for "scale potential." You're backing into valuation based on real cash, not aspirational multiples.

When you're sourcing deals on platforms like Deal Alert AI, you can filter by EBITDA and revenue, but you cannot see cash-on-cash return directly—you have to calculate it yourself using this framework. It's the work that separates signal from noise.

The Hidden Costs That Destroy Cash-on-Cash Returns in Online Businesses

Every online business acquisition has invisible drains that compress cash-on-cash return by 5-15 percentage points if you're not watching. These are not theoretical—they're documented from acquisition failures.

Platform and Dependency Risk (5-8% return compression): You buy a Shopify store generating $300K annually. You think you own it. Then Shopify changes its fees structure, or your product violates a new merchant policy, or Facebook ads increase in cost 40% (which actually happened in 2022-2023). Your customer acquisition cost just increased by 40%, which might compress margins from 25% to 15% overnight. You don't own the platform—you're renting access to customers through it. Factor a 5% annual reserve for platform risk. If you're buying a business dependent on a single traffic source (Google affiliate traffic, Instagram, TikTok), double that reserve.

Customer Concentration (3-10% return compression): You analyze a $500K revenue business and see 40% gross margin, so $200K gross profit. But when you dig into customers, you find the top 5 customers represent $200K of revenue (40% of total). One customer decision to switch suppliers or renegotiate terms and your margin is destroyed. Every $100K in revenue from a single customer is a $10-15K annual risk against your cash flow. If customers are concentrated, discount cash-on-cash return by 10 percentage points, minimum.

Churn and the Hidden CAC (4-8% return compression): SaaS businesses and subscription models must account for churn. A $200K ARR business with 5% monthly churn is losing $10,000 in annual recurring revenue per month—$120K per year. The seller doesn't usually highlight this because it destroys the valuation story. If you're buying a subscription business, model out what happens if churn increases from 4% to 6% (which is statistically likely as new owner). Can the business absorb the margin compression while you stabilize? If not, discount your cash-on-cash return accordingly.

Technical Debt (3-12% return compression, depending on severity): You acquire a SaaS product built on a legacy codebase. It works, but adding features takes twice as long as it should. Scaling requires infrastructure changes that cost $30K. Every new hire needs two weeks of training because the code is undocumented. This is technical debt—and it costs 10-15% of engineer time annually just to maintain equilibrium. That's real money directly off your cash-on-cash return. Hire an external developer to audit the codebase before acquisition. Budget for technical debt remediation.

Transition and Learning Curve (2-6% return compression): You take over a business and learn the first 60 days are chaotic. You might lose some small customers because processes aren't documented. You'll discover that contracts are buried in Gmail. You'll find software subscriptions nobody remembers paying for. This isn't a 5% return hit from poor acquisition—it's a real 2-6% hit from operational friction. Account for it in your cash-on-cash calculation by being conservative on year-one projections.

SEO and Algorithm Risk (2-8% return compression): If revenue is primarily organic (SEO or algorithmic), you're one algorithm update away from a 30% traffic decline. I've seen content sites lose $4,000/month in revenue from a Google update. If your business depends on search traffic, algorithmic reach, or platform recommendations, discount the stability of cash flow by at least 5 percentage points.

Add these up: A business that looks like 35% cash-on-cash return on paper might be 20-25% after you account for realistic hidden costs. That's the difference between a good deal and a marginal one. This is why proper due diligence isn't optional.

Cash-On-Cash Return Targets by Online Business Model

Different online business models have different risk profiles and should have different return hurdle rates. Here's what I've learned from analyzing patterns in the marketplace.

E-Commerce and Arbitrage Models (Target: 30-50% CoC return): These businesses have tangible unit economics, transparent margins, and relatively predictable cash flow. A dropshipping or retail arbitrage business that can't generate 30%+ cash-on-cash return in year one is not a good acquisition target unless you have specific, validated plans to improve unit economics. The margin structure is visible and measurable, so there's less hidden risk. If a seller is asking a premium multiple (3x+ revenue), they're implying the buyer should get lower cash-on-cash return—which means the risk is priced in explicitly. Only take that risk if you have a differentiated operational improvement plan.

SaaS and Recurring Revenue Models (Target: 20-35% CoC return): These have lower cash drag than transactional models because revenue is predictable, but they require infrastructure and ongoing customer management. The benchmark here is lower because MRR/ARR provides downside protection. A SaaS business generating 20% cash-on-cash return with 85%+ gross margins and 4% monthly churn is better than an e-commerce business at 20% because the cash flow is more predictable. However, SaaS businesses also have higher operational complexity, so don't go below 18% unless the business is truly boring, predictable, and requires minimal active management.

Content and Affiliate-Based Models (Target: 25-50% CoC return): These should generate high cash-on-cash returns because operating expenses are minimal and COGS is near zero. If you're buying a content property or affiliate site that's only delivering 18% cash-on-cash return, the valuation is too high. These businesses are capital-efficient, so you should demand higher returns relative to SaaS. The tradeoff is that SEO/algorithmic risk is higher, but you can control that by diversifying revenue sources. A content business that generates 40%+ CoC return with multiple revenue streams is genuinely attractive.

Marketplace and Platform-Based Models (Target: 15-25% CoC return, and be careful): These are hardest to value because they depend on network effects, platform changes, and user behavior you can't control. Commission-based marketplaces, review platforms, and community businesses are in this category. If you're buying a marketplace business, you should demand lower absolute return targets because the risk is higher, but you're also potentially buying access to a scaling mechanism you can improve. Be extremely conservative in modeling these—assume 20% lower traffic and 15% lower commissions than the seller shows you. If the deal still works at conservative assumptions, you might have something. If not, the risk-return tradeoff is broken.

The common pattern: the less capital intensive the business, the higher your cash-on-cash return target should be. You're trading less stable cash flow for better cash-on-cash efficiency.

How to Negotiate Price Using Cash-On-Cash Return Math

This is where the rubber meets the road. Once you understand cash-on-cash return, you can reverse-engineer what you should actually pay for a business instead of accepting the seller's asking price.

The Reverse Engineering Framework: Let's say you're looking at an online business with $120,000 in annual distributable cash (after all expenses and owner salary). The seller is asking $600,000 (5x multiple). What's the implied cash-on-cash return? ($120,000 / $600,000) × 100 = 20%. Is that acceptable given the risk? Probably not for a first acquisition. Your hurdle rate might be 30-35% because you're taking execution risk, platform risk, and customer concentration risk.

If your target is 30% cash-on-cash return and the business generates $120,000 annual cash, the business is worth: $120,000 / 0.30 = $400,000 maximum. Not $600,000. At $400,000, you're getting your hurdle rate. The seller is overpriced by $200,000, or about 33% above fair value. This is your negotiating anchor.

Most sellers won't come down to your valuation immediately. Here's the path:

Step 1: Present Your Cash-on-Cash Model Show the seller your calculation using their own data. Don't be aggressive—use conservative assumptions, maybe even favorable to them. Show that at their asking price of $600,000, the buyer gets 20% cash-on-cash return. Then ask: "At that return level, I'm taking on execution risk, platform risk, and I'm required to deploy $600K in capital. My target return is 30% for a deployment of that size. For me to justify $600K, the business would need to generate $180K in annual distributable cash. Can we discuss what would need to change to get there?"

This reframes the negotiation from "price haggling" to "what cash generation looks like." Most sellers either don't know their actual cash flow, or they know and are hoping you won't do the math. When you show the math, you're suddenly negotiating a different contract—one based on reality instead of multiples mythology.

Step 2: Identify Realistic Improvements You Can Make If the business is generating $120K in cash but you can improve it to $150K through operational changes you've already identified, you might be comfortable paying more. Say: "I see the business at $120K cash generation today, but I've identified $30K in potential improvements through [specific changes]. That gets me to $150K cash generation, which at my 30% hurdle rate supports a $500K valuation. I'll pay $500K today if we escrow $50K for me to hit those operational improvements in year one." Now you've moved price, but you've also protected yourself against execution risk.

Step 3: Use Seller Financing to Adjust for Risk If you can't agree on cash price, propose seller financing. "I'll pay you $500K total—$300K cash at closing, and $200K in seller financing over 24 months, tied to the business hitting $120K+ annual cash generation targets." This is actually fair to both parties. The seller gets paid over time, so they're betting on the business continuing to perform. You're protected because if cash flow drops, you pay less. This aligns incentives and often closes deals that pure price negotiation can't move.

Real Negotiation Example: You're looking at a content business asking $350K with $70K annual cash generation (20% cash-on-cash). Your hurdle rate is 30%. You want to pay $233K. The seller won't budge below $320K. You propose: "$280K cash at closing, plus $40K performance bonus over 12 months if the business hits $85K+ annual cash generation (which you've identified as achievable through modest traffic growth and sponsor rate increases). That gets us both to $320K, but it gives me protection against execution risk and it incentivizes you to stay involved and help with the transition." Most sellers will take this because they still get $320K, but it's structured as risk-adjusted.

Key Metrics to Track Post-Acquisition to Protect Your Cash-on-Cash Return

You've calculated cash-on-cash return, negotiated the price, and closed the deal. Now you need to monitor three key metrics to ensure the cash flow you modeled actually happens.

Metric 1: Monthly Distributable Cash (MdC) Track this obsessively starting month one. This is your true north—the cash you can remove from the business monthly after all expenses, taxes, and working capital reserves. It should match the annual projection divided by 12. If it doesn't, you need to diagnose why immediately. Is customer acquisition cost rising? Are operating expenses higher than modeled? Is a customer concentration issue emerging? You should have a dashboard showing MdC for the last 12 months, trended, with year-over-year comparison. If MdC drops below 70% of your projection, escalate it to a board-level decision: stabilize the business or pivot to improve unit economics.

Metric 2: Unit Economics (Customer Acquisition Cost vs. Lifetime Value) For any model with customer acquisition, you need to track CAC (what it costs to acquire a customer) vs. LTV (what a customer generates over their lifetime with you). If CAC is rising or LTV is dropping, your cash-on-cash return will decay over time. A business with $120K cash generation today might have $90K next year if CAC rises 20%. Monitor this monthly and adjust marketing spend accordingly. This is the early warning system for margin compression.

Metric 3: Cash Conversion Rate (Revenue to Distributable Cash) For your specific business, what percentage of revenue converts to cash you can take out? A SaaS business should be 35-50%. An e-commerce business should be 12-25%. A content business should be 60-80%. If your rate is dropping, something's wrong. You're either paying for expenses that shouldn't be there, or revenue quality is degrading. Benchmark your conversion rate against the seller's historical data and against your projections. Anything below 80% of projection warrants investigation.

The businesses that maintain their cash-on-cash return post-acquisition are the ones that obsess over these metrics. The ones that decay are the ones where the owner takes their eye off the ball and assumes everything's fine because revenue looks okay. Revenue lying—cash doesn't.

When Cash-on-Cash Return Should Not Be Your Primary Metric

There are legitimate scenarios where cash-on-cash return isn't the primary decision metric. Be honest with yourself about whether you're in one of these categories.

Scenario 1: You're Buying for Strategic Optionality, Not Cash Now You're a founder with existing operating businesses and you're acquiring a company specifically to roll it into your existing operation and cross-sell or integrate. In this case, cash-on-cash return might be lower in year one (say, 12%) but the strategic value justifies it because you'll generate $200K+ in incremental profit from the acquisition through integration. This is legitimate, but be explicit about the economic justification. You're not overpaying—you're allocating capital toward a specific strategic goal that has measurable ROI beyond simple cash generation.

Scenario 2: You're Buying a Platform or Network That Requires Investment Before Return Marketplace platforms and community-based businesses often require 12-24 months of investment before cash flow emerges. A community platform might have negative or low cash-on-cash return in year one but generate 50%+ in year three if you execute correctly. This is defensible, but requires: (1) you having enough capital reserves to fund the investment, (2) validation that the improvement thesis is based on repeatable execution elsewhere (not just hope), and (3) a clear milestone plan for when the return should materialize. Don't buy a "growth story" business if you don't have capital and expertise to actually grow it.

Scenario 3: You're Acquiring as a Tax or Financial Escape Hatch This is rare but sometimes legitimate. You have $1.2M cash and no immediate need for annual returns—you're buying a $400K business at 12% cash-on-cash ($48K annually) because you want to deploy capital and generate passive income while deferring taxes or escaping a market downturn. This works if you're genuinely okay with that return as a long-term hold, not if you're telling yourself "I'll flip it in three years for higher returns." Passive ownership of lower-return businesses is legitimate if you're explicit about it.

If none of these apply to your situation, cash-on-cash return should be your primary decision metric. Don't override it based on growth projections, market size, or the seller's charisma. Cash is cash.

The Tools and Framework for Evaluating Cash-on-Cash Return When Sourcing Deals

Building a simple financial model for any potential acquisition takes 45 minutes and eliminates 80% of bad deals before you waste time on diligence.

Here's a repeatable framework you can use for every deal:

The 15-Minute Screening Model: Create a simple spreadsheet with five rows: (1) Asking Price, (2) Last 12 Months Revenue, (3) Seller's Stated EBITDA, (4) Your Conservative Estimate of Distributable Cash (EBITDA minus owner salary, adjusted for reality), (5) Implied Cash-on-Cash Return.

Example: