Hi all!
I've searched the past posts for examples here but wasn't able to find anything super useful. I'm pre-LOI on a CPG deal where revenue and SDE has jumped 300% in the last 3 years, and 75%+ in the last year alone YoY. I'm worried about the current levels being sustainable and my DSCR depends on it so am considering structuring the offer with a 20% forgivable seller note (5yr term). The remaining 80% would be a mix SBA 7a loan and cash. I'm hoping to get thoughts on the following forgiveness terms - each year of term, 20% of loan value may be forgiven if EBITDA does not exceed 90% of###-###-#### excluding changes in Owner's Salary). Thankfully, the deal has low customer concentration so that felt less applicable to tie forgiveness to. I expect the seller to have some heartburn over my influence on the business's cost structure so am open to ideas on how to navigate those conversations too. My understanding is this note structure is allowed with SBA as well but have put the same thoughts in front of the lenders I'm chatting with. Appreciate any advice/guidance in advance!
Seller Note Forgiveness Terms
by a searcher from Arizona State University
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