Should you build it or buy the business?

Compare the cash, time and risks of growing from scratch versus acquiring a working business. The example below is fictional and already running: move the integration slider and watch the answer change.

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Step 1: Pick a starting point

Start from a fictional example, or clear it and enter your own figures.

Build a new product line, or buy a small company that already sells one?

A software firm wants an adjacent product. Building takes a year; a profitable small vendor could close in three months.

Step 2: Check the numbers

Each path uses the same measure of cash: pre-tax operating cash after recurring capex and working capital, before financing.

The figure that swings the answer most

Longer integration keeps the monthly integration cost running and pushes back any synergy. The business keeps trading throughout.

Build it

Everything you would spend before the new line earns: people, product, launch.

Whole months. The budget is spread evenly across them. 0 means you spend it all today.

Pre-tax operating cash once fully ramped, after recurring capex and working capital, before financing.

Acquire a business

One payment at closing. Earnouts, deferred payments and debt are not modelled here.

Same definition as the build path: pre-tax operating cash after recurring capex and working capital. EBITDA is not cash flow.

Acquire a business comes out aheadby US$34.5kSee the answer

Step 3: The answer

Under these assumptions, acquire a business has the higher modelled present value, by US$34,541.

Build it
US$532,821
Value today of 60 months of cash
Acquire a businessAhead
US$567,362
Value today of 60 months of cash
Break-even purchase price
US$935,770
Pay less than this and acquiring wins; pay more and building wins. Not a valuation or a recommended bid.
Integration tipping point
6 months
If integration takes 6 months or longer, build it comes out ahead, all else equal.

Step 4: See why

Three ways to see what drives the answer. Pick a view.

  • Build it(solid)
  • Acquire a business(dashed)
Undiscounted cash in and out, added up month by month. By month 60, build it is at US$1,100,000 and acquire a business at US$1,210,000. Their lowest points are -US$600,000 (month 12) and -US$1,025,000 (month 3). The present values above discount these same flows.

Step 5: What could change the answer?

Some of these realistic setbacks reverse the answer. Those are the assumptions worth testing first. Press Apply to try one.

  • Integration takes 12 months longer

    Integration 3 to 15 months

    Build it by US$121,197

    Reverses the answer

  • Acquired cash flow falls a further 20 points

    Cash-flow downside 0% to 20%

    Build it by US$285,383

    Reverses the answer

  • Building is 25% faster and 20% cheaper

    Build 12 to 9 months, budget down 20%

    Build it by US$168,216

    Reverses the answer

Step 6: Keep a copy

Made in your browser with every assumption included. Nothing is uploaded. For a PDF, choose “Save as PDF” in the print dialog.

If acquire a business is worth exploring

Turn your assumptions into a short private brief. It stays on this page: nothing is sent anywhere unless you copy it and choose to share it.

Private buyer brief (prepared with Acquiry’s Build or Acquire tool)

Capability sought: Not stated yet
Geography: Not stated yet
Constraints: None stated

Economic boundary, under my assumptions over 60 months at a 15% discount rate:
- Acquiring matches building at a single upfront price of about US$935,770, including US$25,000 of fees and US$100,000 of one-off integration cost.
- Target operating cash assumed: US$40,000 a month, 0% downside after closing, 3 months of integration.
- Building instead: US$600,000 over 12 months, reaching US$40,000 a month after a 12-month ramp.

Evidence I would need from a target:
- Monthly operating cash flow on the same definition (after recurring capex and working capital).
- What the cash flow depends on, and what would change it after a change of owner.
- What integration would involve, and how long it would take.

Modelled only. Not a valuation, offer or recommendation.
Discuss an acquisition search with Acquiry

Educational model only. Presets are fictional. The purchase-price parity is the price at which two user-defined scenarios are equal over the chosen horizon. It is not a valuation, a recommended bid, financing advice or an available target.

How the model works

Two monthly cash-flow paths

Both paths are modelled as pre-tax, unlevered operating cash flow after recurring capex and working capital, before financing, at time 0 and at every month end up to the horizon. Building spreads the build budget evenly over the build months, then ramps to mature cash flow. Acquiring pays the price, fees and one-off integration cost at closing, then earns the acquired cash flow less any cash-flow downside, with monthly integration costs during integration and optional net synergies only afterwards.

Present value and price parity

Each path is discounted at your annual rate converted to a monthly rate. The parity price is the difference between the acquisition value excluding the purchase price and the build value, carried forward to the closing month. It assumes one payment at closing and fixed fees. A negative result is shown as negative.

What is excluded

No value beyond the horizon is counted for either path, so try a longer horizon to see how much the answer depends on it. Debt and equity are kept out of operating value; use the capital stack builder for funding. EBITDA is not cash flow: if that is all you know, convert it first with the SDE and EBITDA calculator.

Method version

Method v1.0.0, 2026-10-22. Calculations are deterministic and run locally. Nothing you enter is sent anywhere unless you choose to share a brief.

For publishers and educators

Want a useful tool for your readers?

We offer a bounded free pilot: one decision tool adapted for your audience, subject to an agreed scope. Your editorial independence stays intact. No coverage, links or reader data are part of the arrangement.

  1. One reader decision

    We agree a single question your readers actually face, such as launching a product or acquiring an audience.

  2. A branded calculator

    Your approved logo, colours and terms on the same tested engine, with fictional examples written for your readers.

  3. A clear methodology

    Every formula is published with the tool, so readers and editors can check how each number is calculated.

Discuss a free custom-tool pilot

If acquiring still wins under your stress tests, the next step is finding the right business.

Buy-side and sell-side mandates across any sector and any market. If it is a real transaction, bring it to us.

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