Alternative ways to Fund M&A Acquisitions in the USA (Outside SBA)
September 11, 2024
by a lender from City University London - Cass Business School in Londres, Reino Unido
For USA based Micro-Private Equity & SearchFunds, there is a better way to finance acquisitions and structure deals than just going down the traditional SBA Route.
Don´t get me wrong, the SBA loan facilitates good deal structures to happen, BUT come with a very significant risk. You are essentially Personally Guaranteeing the full Loan amount, with YOUR personal assets. So the legal separation between your personal assets and the business assets/risk, basically evaporates and becomes one.
I started my career, structuring LBOs for the acquisition of SMBs for a family office without having to Personally Guarantee the full loans and by actually creating deal structures that were a win for the bank, a win for the seller and a win for us as a buyer. (putting in as little equity as possible). We grew over 3 years, to more than 100M+ in Revenue.
Through that experience, I learned a lot about how to structure acquisitions via alternative lending and financing options and currently help other Private Equity Firms, Search Funds and Business owners acquire other businesses, access capital for Buy & Builds and also business Refinancing capabilities.
If you would like to know how my team and I have successfully helped more than 300+ deals successfully transact outside SBA loans, I´d love to hear about you and your goals, and how we may be able to assist you.
Please contact me via Email redacted or Linkedin!
from INSEAD in San Francisco, CA, USA
Sure the SBA comes with an unlimited PG - but all in is all in. Who else is going to loan you $5M when you only have $100k in equity in your house? The government is sponsoring the loan to reduce risk otherwise the bank would never lend you that money in the first place without significant assets.
I've spoken to multiple banks and loans outside the SBA overwhelmingly (a) still require a general PG and (b) require you to have experience in the industry.
A family office / PE firm probably might have enough deposits + a long-standing relationship with the bank + experience to access capital without a PG but I have a hard time believing a bank would give the average search fund investor such a deal.
in Rindge, NH 03461, USA