Rex says
Money math without the spreadsheet headache. Plug in your numbers and I'll show you exactly where the dollars land.
Try a scenario
Click to load — tweak from there.Inputs
Result
Present value of total deal
$3,064,671
Upfront cash at closing
$2,240,000
Present value of deferred payments
$824,671
Value lost to timing/risk discount
$135,329
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How to use this
- 1Enter total agreed sale value ($).
- 2Enter upfront cash at closing (%).
- 3Enter years over which deferred portion is paid.
- 4Enter discount rate (risk/time value) (%).
- 5Read your present value of total deal on the right — it updates as you type.
- 6Hit Share to keep the scenario or send it to someone.
About this calculator
Practice sales rarely pay out entirely at closing — sellers commonly get a cash payment upfront plus a seller note or earn-out tied to retained production and staff continuity over one to three years. This calculator takes total agreed sale value, splits it into upfront cash and a deferred portion paid over a set number of years, and discounts the deferred payments to a present value using a chosen discount rate, so a seller can compare offers that look similar on paper but differ in real economic value once timing and risk are accounted for.
Worked example
Using the values the calculator loads with:
Inputs
- Total agreed sale value: 3200000 $
- Upfront cash at closing: 70 %
- Years over which deferred portion is paid: 3
- Discount rate (risk/time value): 8 %
Results
- Present value of total deal: $3,064,671
- Upfront cash at closing: $2,240,000
- Present value of deferred payments: $824,671
- Value lost to timing/risk discount: $135,329
What each field means
Inputs
- Total agreed sale value ($)
- The total agreed sale value used in the calculation, measured in $. Starts at 3200000 $ so you have a working example on load.
- Upfront cash at closing (%)
- The upfront cash at closing used in the calculation, measured in %. Starts at 70 % so you have a working example on load. Accepted range: 0–100 %.
- Years over which deferred portion is paid
- The years over which deferred portion is paid used in the calculation. Starts at 3 so you have a working example on load. Accepted range: 1–10.
- Discount rate (risk/time value) (%)
- The discount rate (risk/time value) used in the calculation, measured in %. Starts at 8 % so you have a working example on load. Accepted range: 0–25 %.
Results
- Present value of total deal
- Returned as a money amount in US dollars and shown as the headline result. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Upfront cash at closing
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Present value of deferred payments
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Value lost to timing/risk discount
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
FAQ
Why discount the deferred payments at all — isn't the total sale value fixed?
Money received in three years is worth less today than the same dollar amount received at closing, both because of what you could earn investing it now and because deferred payments (especially earn-outs tied to hitting production targets) carry real risk of coming in lower than projected or not at all.
What discount rate should a seller use?
8-12% is a reasonable range reflecting both the time value of money and the added risk of an earn-out versus a fixed seller note. Use the higher end if the deferred payment depends on retained production targets or the buyer's ability to run the practice successfully; use the lower end for a fixed-payment seller note with a personal guarantee.
How does more upfront cash change the deal's real value?
All else equal, a higher upfront percentage always raises present value because less of the total is exposed to discounting and earn-out risk. This is why experienced sellers often accept a somewhat lower total headline price in exchange for a meaningfully higher upfront cash percentage.
Accuracy and limitations
- Results are estimates before tax, fees, and inflation unless an input explicitly covers them.
- Rates are treated as fixed for the whole period — variable-rate products will drift from this projection.
- This is educational maths, not financial advice. Check anything contractual with the lender or your accountant.
Related tools
Cite this calculator
Writing about this topic? Grab a citation — every link helps keep these tools free.
RevenueLab. (2026). Practice Transition Timeline & Value Calculator. Retrieved from https://www.revenuelab.fyi/toolbox/practice-transition-timeline-value
<p>Source: <a href="https://www.revenuelab.fyi/toolbox/practice-transition-timeline-value" target="_blank" rel="noopener">Practice Transition Timeline & Value Calculator — RevenueLab</a> (2026).</p>
Source: [Practice Transition Timeline & Value Calculator — RevenueLab](https://www.revenuelab.fyi/toolbox/practice-transition-timeline-value) (2026).