Healthy DSCR for a Business acquisition today

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February 10, 2025

by a searcher in Lawrence, NY, USA

Hi

Does anyone have any guidance on what type of DSCR in todays environment is achievable and what you should try and target in the construction services and manufacturing category up to a $5M purchase price?


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Reply by a searcher
from State University of New York (SUNY) in Buffalo, NY, USA
You can get a deal done with most bankers above 1.5x. The closer you can get to 1.75x the better. I closed at ~1.8x and it still feels tight at times, especially since there’s mild seasonality in my business. Don’t forget that taxes are excluded from the calculation, but are a real cash outflow from the business.
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Reply by a searcher
from The Johns Hopkins University in Houston, TX, USA
^redacted‌'s recent webinar hosted by Acquiring Minds included a great slide showing how a given DSCR (along with other factors) influences the number of SBA lenders who would consider funding a deal, and at what rates they'd be willing to lend.
https://acquiringminds.co/webinars/5-stages-of-the-business-buying-process
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