Why IRR alone, with no NPV, WACC or ROE: Keeper holds businesses permanently — there's no planned exit. NPV requires assuming a discount rate (WACC) and an exit value, both of which are inconsistent with a "buy to keep" model: you'd be pricing a sale you're explicitly saying you'll never make. IRR needs nothing but the actual cash flows — money out, money in, and the rate at which one becomes the other. Since Keeper is fundamentally in the business of deploying cash for the best available return, IRR against a hurdle rate is the direct, internally-consistent test of a deal, and this model uses it as the sole basis for the verdict above.
Modelling horizon: there's no real "hold period" to set — Keeper doesn't plan to sell. The years figure here is a practical cut-off for the cash-flow projection, not a planned exit date; set it long enough to approximate an indefinite hold (a few decades) rather than treating it as a deal term.
IRR — nominal vs effective: IRR is solved from the actual monthly cash-flow ledger (cash out at settlement, any deferred consideration, vendor-loan repayments, monthly cash generation). The nominal figure just multiplies the monthly IRR by 12; the effective figure compounds it — (1+monthly)^12−1 — which is the truer annual return since cash is reinvested monthly in practice. The badge above tests against the effective figure by default.
Working capital & deferred consideration: working capital injection adds straight to the cash required on day one, even on a "cash free, debt free" deal. Deferred consideration (a holdback or earn-out) reduces the cash needed at settlement but adds a lump-sum cash outflow at the month you specify — unlike the vendor loan, it isn't amortised or interest-bearing.
Reading the chart: the leftmost bar ("Settle") is the lump sum paid at settlement — equity plus working capital — always shown in red since it's cash out. Every year after that nets cash in (green) against vendor-loan repayments and any deferred payment falling in that year; a year only turns red if repayments exceed cash generated. The navy line is the running cumulative position, and the gold dot marks payback — the month cumulative cash turns positive.
Export Excel pulls out the exact maths behind this model — every assumption and formula, into a live, editable workbook (Summary + a full monthly Cash Flow ledger), so you can audit or share the calculation outside this tool. It needs a brief internet connection the moment you click it (to load a small Excel-writing library); everything else on this page works fully offline.