Financing Deal w/ Rollover Equity

May 05, 2025

by a searcher from Abilene Christian University in Dallas, TX, USA

I'm speaking with a Seller that is looking so sell his business in a very niche industry with $2M EBITDA and 35-40% EBITDA Margin. He is wanting to rollover 15-30% equity and continue working day-to-day in the business alongside myself to grow the business even further. To clarify we both would actively be working in the business and my background would help assist growing the business even further. A couple days before the SBA policy changes I had an SBA bank willing to finance a partial buy-in to purchase 70% of the business for $7M - $5M via SBA and $2M seller note, however since the rollout of the new SBA changes the bank is not as interested even if the numbers and business plan are strong due to the type of acquisition. Any recommendations on SBA financing or non-SBA financing when Seller is rolling over 30% equity and to remain working in the business with myself?

Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA

Without knowing more about the deal it is hard to say what other options you have. I would be happy to talk to discuss conventional or potential non-bank options. You can reach me here or directly at redacted There may be some conventional options depending on the total leverage on the deal. The new SBA rules are clear that you cannot do seller roll-over equity or a partial acquisition where the seller's equity is rolled into a new company. However, you can do partial business acquisitions still where you are purchasing a portion of the stock or membership interest. However, in doing that you need the sellers to be willing to guarantee the entire loan for two years, even if they individually retain less than 20% of the equity. So unless the sellers are willing to sign a guarantee, then it is unlikely you would be able to get the loan done via an SBA loan.

Reply by a professional
from University of Michigan in Detroit, MI, USA

Hi Anon, without knowing the details, you should sill be able to do this deal. If you want to go the SBA route, you can't do a traditional asset rollover. However, the seller can still retain 30% equity in a stock transaction. In other words, it sounds like you have a lender issue, not a structure issue. Reach out to ^redacted‌ or ^redacted‌. They'll be able to help. And if you ever want to discuss the legal side of buying this business, let me know. Happy to chat. Reach me at redacted

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