So I got an HVAC company under LOI! (excited and nervous)
September 07, 2023
by a searcher from University of Utah in Salt Lake City, UT, USA
Hey guys figured I'd update everyone (since I know everyone was wondering... haha jk)
So I got an HVAC company under LOI!
I just started due diligence QoE with Ampleo sent over a big list of questions and documents requested to the sellers.
I am excited for this journey but also proceeding with caution looking out for any red flags.
I have 3 months to close.
I plan on setting up probably Reg D 506(C) offering to accredited investors who want to invest in the deal alongside me.
I plan on buying the business with 50% leverage with an SBA loan and then a bit of a seller note and then raise the rest in equity and put in $100-$200k of my own funds into the deal. Probably a $1M equity raise so nothing too huge.
One question I have is what are market splits if I bring in investors?
I am thinking about a 10% preferred return then splitting the deal 30% to the LP's and 70% to me, the GP above and beyond that.
I will take a 2.5% acquisition fee
7.5% EBITDA asset management fee
and a 1% disposition fee.
If anyone has done a similar deal let me know what your splits and fees were to investors. That would be helpful for me to get a baseline of info.
Happy to chat with anyone. Send me an email to discuss redacted or you can book a call on my calendar calendly.com/seantagge
from Southwestern University in Houston, TX, USA
Keep in mind that you're not building a fund - you're financing a business. The structures - especially at this size - are much simpler.
Generally speaking, at this size you're going to be looking at an 80/20 waterfall (to the investors) until you repay the principle and then a gentler split until they get their###-###-#### 2X return on their money. Even then, this is a small raise that a lot of private money won't bother with.
This is why a lot of searchers will just use the SBA for the max amount (longer repay period, lower rates) and save equity for the down payment, which it sounds like you can make on your own.
from Brigham Young University in Salt Lake City, UT, USA