BVX® Cash Flow definition is unique to BVX®. It has no comparable in traditional finance or accounting. It is a critical component to BVX® approach.

BVX® Cash Flow is the cash flow available after satisfying all cash needs of the business. It is the cash flow after debt service, after taxes, after funding the operations, after putting aside Cash Reserves and Excess Cash, and after taking advantage of the borrowing against the working capital. 

A key logic of BVX® is that a buyer should be willing to accept zero BVX® Cash Flow because all the cash requirements are satisfied; however, buyer will not accept negative BVX® Cash Flow because that implies additional equity infusion after the acquisition. Therefore, to maximize the price, BVX® algorithm keeps raising the purchase price multiple until all requirements are satisfied (See BVX® Iterative Method), including BVX® Cash Flow  reaches zero (see exceptions below) in at least one of the five years, which usually happens to be in Year-1. BVX® Cash Flow of zero does not mean the business has no cash, because BVX® Cash Flow is measured after setting aside Cash Reserves and Excess Cash. 

BVX® Cash Flow is calculated as follows:

BVX® Cash Flow   =  Operating Cash Flow 

+ Beginning cash 

- Required Operating Cash 

- Cash Reserve 

- Excess Cash

+ New borrowing against working capital 

Where, Operating Cash Flow is the cash flow after servicing all debt obligations, after taxes, after funding working capital and capital expenditures, after borrowing against the capital expenditures, and after distribution to cover personal taxes of S Corp. shareholder.

BVX Cash Flow is programmed to be zero in Year-1 for all situations, except it is allowed to be positive in following situations.

a) Gap (Seller) Note Restriction. The two requirements, i) BVX Cash Flow equal zero and ii) the Gap (Seller) Note be restricted to a specific amount, cannot be satisfied simultaneously. Hence, BVX Cash Flow can be positive, but minimized, in this situation.