Raising funding for much bigger deal as a self-funded searcher

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December 06, 2023

by a searcher from Northwestern University - Kellogg School of Management in Tampa, FL, USA

I planned my search around using SBA loan. My proprietary search however led me to a 3M+ ebitda deal which is valued at close to $15M. Can anyone share their experience raising capital for such significant deals. Is it common/feasible without committed capital?

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Reply by a searcher
from University of Pennsylvania in Miami, FL, USA
There are many SBIC firms that play in this world. Will usually do 4x leverage. In addition to debt, many of the SBIC will do minority equity as part of the deal. Some will do the entire deal. Will be tough to get self funded economics; likely to end up as an independent sponsor deal + additional equity if you operate. Still good but not 80% of common. However, since the deal is larger than typical SBA-type deals, it could work out to similar $$$ payoff at end of day.
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Reply by a searcher
from Virginia Polytechnic Institute and State University (Virginia Tech) in Blacksburg, VA, USA
This one is going to be tough. Too large for SBA. Too small for a private credit group. To do a straight conventional loan you'll likely have to raise at least $6M, and probably closer to $7M. Plus the lending environment isn't great right now. Bank deposits are down so they're being a lot more picky. You aren't going to want to hear this, but an inexperienced operator is probably not going to get this deal done.
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