Acquisition Deal Structures

July 30, 2024

by a searcher from Babson College - F.W. Olin Graduate School in Annapolis, MD, USA

Good Day,
I am trying to learn more about possible deal structures.

Can anyone point me to a source for small business acquisition case studies or deal structure summaries?

Many Thanks!

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Reply by a professional
from University of Notre Dame in New York, NY, USA

Thanks for the tag ^redacted‌ - This question is pretty broad, but as others have noted - it's going to be very business specific and you need to think about the basics -- Purchase Price and how much of that you can finance from a bank, make-up of company assets, preferred seller involvement post-closing, licensing/regulatory issues, financial risks involved in the business (upfront closing cash vs deferred consideration); legal risks involved in the business (asset vs stock sale; indemnification and escrows).

There's really no one size fits all approach to a deal - I'd poke around on google re: some of the terms thrown around in this thread and talk to different individuals who work in this space to familiarize yourself with concepts. Happy to chat to help however I can. Feel free to DM me or shoot me an email redacted

Reply by a searcher
from Biola University in North Tustin, CA, USA

Thanks ^redacted‌ Given high interest rates combined with my having to look at sub $500K EBITDA deals and some Cali licensing requirements, I’m finding it hard to make many deals cashflow without some more than complex than I’d like deal structures. Sticking with some minimum EBITDA margin, debt as a percentage of free cashflow, and IRR targets, I’m having to ask for relatively high seller financing to compliment SBA/bank financing (capped at $500K to avoid home in PG per spouse). Also having to give up some equity to license holders for them to act as RMO. Seems EBITDA needs to be minimum $350K to even come close to being worth it (and unfortunately not enough to quit the W2 job). Not easy but figure just gotta keep casting the line until I hook something, otherwise may have to pivot to real estate.

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