Management buyout calculator
Model the funding structure of an MBO in one minute — deposit, vendor loan, borrowed money — and see whether the company's own profits can realistically pay for it. The same first sums we run before any deal goes near a lender.
| Debt required from lenders | — |
| Annual repayments on that debt (capital + interest) | — |
| Debt service coverage (EBITDA ÷ repayments) | — |
| Leverage (debt ÷ EBITDA) | — |
Illustrative only. Amortising repayment assumed; real facilities vary in structure, pricing and covenants, and vendor loan terms (interest, standstill, ranking) materially affect what senior lenders will do. This tool provides general illustration, not advice or an offer of terms. Your figures stay in your browser — nothing is sent to us.
What the numbers mean
Coverage is the number a credit committee reads first: how many times the company's annual profit covers the annual repayments. Above roughly 2×, the deal breathes. Between about 1.25× and 2× it can work, but the structure has to be right — term, vendor standstill, working capital — and the forecast has to hold. Below 1.25× the company cannot pay for its own purchase as structured, and something has to change: price, deferral, term, or the deal itself.
Leverage is the second read: total borrowing as a multiple of EBITDA. UK SME lenders are typically comfortable somewhere up to 2–3× for deals like this; beyond that, the case needs to be exceptional or the structure needs more vendor support.
The most common fix when an MBO doesn't stack up is not a cheaper loan — it is a bigger vendor loan. A seller who defers more of the price, on sensible terms, reduces the day-one borrowing, lifts the coverage, and signals to every lender that the person who knows the business best believes in its future. That is a structuring conversation, and it is precisely the work we do.
Want these numbers run properly — on your actual deal?
A chartered management accountant reads your accounts, pre-underwrites the case the way the credit committee will, and tells you straight: fundable, fundable-with-changes, or don't. Start with the fundability score, or email the shape of the deal to hello@granton.finance.