Situation
An acquisition involving a business and its premises can contain two different investment cases. One depends on durable operating cashflow. The other depends primarily on the real estate. Confusing them can mean paying for earnings that will not survive a change of ownership, or counting the same property value twice.
I worked on the analytical framework for distinguishing those cases and connecting the investment thesis to an acquisition model and capital structure. The work brought together valuation, earnings quality, operating assumptions and the practical question of how a purchase would be funded.
This developed alongside my wider work on development appraisal and deal progression. The common requirement was a clear investment case: understand what creates value, identify what could undermine it, and make the next commercial decision explicit.
What I did
I developed thesis material separating the cashflow case from the asset case. For an operating business, the question is whether maintainable earnings support the price and financing. For an asset-led opportunity, the question is what the property is worth independently and what taking control would require. A proposal can contain both, but each needs its own reasoning.
That distinction informed the valuation approach. Reported earnings need normalisation before a multiple becomes meaningful. Owner remuneration, exceptional costs and the absence of a market rent can distort the apparent profitability of an owner-managed business. Where the business occupies its own freehold, treating the operating earnings as rent-free and then adding the property's full value can double-count the same benefit.
I developed an acquisition appraisal model and a separate capital-stack calculator using AI-assisted tooling. The model has thirteen sheets, connecting raw accounts to a standardised profit and loss, operating drivers, normalisation, valuation, funding, returns, an equity waterfall and sensitivities. Operating guidance and an input specification explain how the pieces connect.
The accounts-mapping layer preserves the target's original line descriptions and maps them to a controlled financial vocabulary. This allows different businesses to feed the same analytical structure. The sector-specific revenue build sits separately, so the operating assumptions can change without rebuilding every downstream calculation.
Valuation uses three lenses: an earnings multiple, discounted cashflow and a net tangible asset cross-check. The point is to expose disagreement between them. A price that looks reasonable on one measure may depend on assumptions that another lens brings into question.
The funding work connects the purchase and completion requirements to senior debt, junior capital, seller finance and equity. The calculator makes the remaining equity requirement explicit and shows leverage, interest coverage and the balance between sources and uses. The fuller model adds debt service and the allocation of distributions between capital providers.
I also made the division between automation and judgement explicit. AI-assisted extraction can populate source lines and propose mappings. Earnings adjustments and forecast assumptions require human consideration. A clean extraction does not establish that an add-back is justified or that an operating forecast is credible.
Outcome
The work produced a connected appraisal framework, two working model artefacts and supporting investment-thesis material. It gives the analysis a route from source accounts through valuation and funding to the implications for equity.
The model is an illustrative decision framework. It includes a worked operating example, an illustrative earnings path and simplified sensitivity calculations. Those examples demonstrate the structure; they are not a record of a completed acquisition or realised investment performance. A live transaction requires the assumptions, accounting links and distribution terms to be reconciled to that specific deal.
The useful result is the connection between the commercial questions. Price, sustainable earnings, operating requirements and financing capacity can be considered together, with the assumptions behind the answer visible.
What it proves
This work demonstrates financial modelling and investment judgement applied to acquisition problems. I can move between the underlying business, the real estate, the valuation and the proposed capital structure while retaining the distinction between them.
It also shows how I use technical tools: to make analysis repeatable and inspectable, while keeping responsibility for the commercial assumptions with the people making the decision.