Commercial Millwork Company

searcher profile

May 28, 2024

by a searcher from Southwestern University in Houston, TX, USA

My partner reminded me about using SearchFunder to look for funding for our next acquisition, so here I am! I have attached a simple 1-pager, but we are an Independent Sponsor that has a successful, growing commercial millwork company under LOI. We are looking for primarily a non-recourse debt-based solution for this successful, growing company that already has all of the work for this year signed and the owner is working on finishing up next years' contracts as well, both years with growth built in. We have equity players or we can use yours if the terms are right. This will be the first company in a "group acquisition" (not really a rollup - more of a geographic spread of similar companies as the market is very fragmented on a national basis). We are under LOI and performing Due Diligence as we speak. No loan brokers, please.
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commentor profile
Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
^redacted‌ thank you for the tag. I would be happy to jump on a call to discuss the lending market in more detail. However, I want to be up front and let you know on a deal of this size it would be challenging to get a non-recourse deal done. First off, doing a conventional deal is going to require significant equity via cash equity, seller roll-over equity, seller note, etc. Typically maximum leverage is going to be somewhere between the lessor of 2 to 3x adjusted EBITDA or 50 to 65% LTC, and more towards the lower side if you are looking for non-recourse financing. Then you run into the second issue. Once you increase the equity size, the debt need is pretty small. From a conventional banking perspective you will end up in the small business banking to lower middle market lending group at most institutions. Those divisions tend not to offer much in the way of non-recourse financing. Bank management usually has pretty strict underwriting guidelines for those lending groups. The deal size is also too small for most of the non-bank lenders at that point.

I would be more than happy to jump on a call to discuss and see if we can find an option that will work for you, but I just want you to be aware up front that it will not be a sure thing to get non-recourse financing on a deal of this size. You can reach me here or directly at redacted
commentor profile
Reply by a lender
from Northwestern University in Chicago, IL, USA
Assuming no SBA, generally it will be difficult finding a conventional bank lender willing to stretch to this ask (2.8x opening leverage with only 10% down on a sub-$2MM EBITDA company). A bunch more equity (50%+ down) to ensure stability for the business is what I’d want to see.

Disclaimer that this opportunity is out of geographic market for me (ie company, searcher, or anchor investor needs to be local to Great Lakes).
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