I'm hoping to tap the experience and creativity of the Searchfunder brain trust for a somewhat tricky deal structuring question. Here's the context: - Longstanding service business in a mature, low-growth category in a Midwest metro - $3M revenue / $800K EBITDA - LLC taxed as a partnership; 8 total owners, 5 of whom are passive investors - CEO (largest shareholder) is ready to retire, with support from the 5 passive investors - The remaining 2 owners are long-tenured employees with about 10% between them The employee ownership creates the structuring challenge, as my understanding is that a standard SBA asset purchase would require them to exit within 12 months (bad for the business) or PG for two years (non-starter). I see two possible alternative paths, but neither is clean. Path 1: Conventional asset purchase Use a smaller conventional bank loan + larger seller note + more outside equity to acquire the assets. I'm guessing the senior loan probably caps out around 2 turns of EBITDA. Key issues include: - Shorter amortization creates very tight early-year DSCR in my model - Even with a generous seller note, the equity requirement is substantial - The resulting equity returns in this mature category compress economics for either investors or searcher Path 2: SBA partial ownership purchase Purchase the 90% held by the exiting owners and leave the two employee-owners’ interests untouched. This would produce a much more attractive capital structure (higher leverage, longer amortization) if it qualifies under the SBA partial change-of-ownership rules. Key issues include: - Finding an SBA lender that agrees with this reading of the SOP - Getting the minority employee-owners comfortable remaining in the existing entity under new control and with added leverage - Managing the tax and inherited-liability issues of an equity purchase Is there a Path 3 that I'm missing? Alternatively, are there tweaks to Paths 1 or 2 that could better address the key issues? I am happy to hear theoretical ideas, but it would be especially helpful to hear from people who have actually seen deals with a similar fact pattern get all the way to the closing table. All perspectives welcome - lender, investor, legal, tax, operator, etc.