How to structure a deal with tremendous recent growth?

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by a searcher from Thomas More College
in Cincinnati, OH, USA

2yrs ago

How to structure a deal with tremendous recent growth?

Company has had tremendous growth in recent years, along with key management turnover. How would you structure offer based on the recent trends while remaining with the SBA requirements?

 Revenue | Adjusted EBITDA

'21: $2.7m | $500K '22: $4.5m | $1.3m '23: $4.7m | $1.7m

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reply by a searcher 1yr ago
from Emory University in Atlanta, GA, USA

Just a note on forgivable seller notes - please remember that these are taxable if forgiven. So, you may have an additional tax burden at the same time the business is not going as planned (assume that would be the reason for the note being forgiven). Important to model that impact on a downside scenario.

reply by a searcher 1yr ago
from Harvard University in San Anselmo, CA 94960, USA

My acquisition counsel structured my seller note in a manner so as not to give rise to tax liability if forgiven. The rationale was based on this being treated as a reduction in purchase price rather than regular way debt forgiveness (which I agree is generally taxable). Worth confirming with your counsel or tax advisor to get the right treatment.