How much leverage is typically deployed in search fund transactions?

by a searcher from INSEAD

3 years ago

Dear all,

Are there any statistics on the use of leverage in search fund transactions?

For example:
* How much of the purchase price is financed via debt?
* What are the typical debt/equity and debt/EBITDA ratios before and after the transaction?
* What are the obstacles to deploy debt in search fund transactions?
* Are there any significant differences between geographies? 

Looking forward to the feedback!

Kind regards,
Jens

6 likes
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19 comments

searcher from Brigham Young University

debt often covering 50% to 70% of the purchase price in non-SBA deals. For SBA-backed deals, leverage can go up to 80% to 90%, depending on the specific circumstances and lender requirements. Debt-to-EBITDA ratios commonly range from 2x to 3x, with higher leverage being harder to secure unless there is strong cash flow and growth prospects.

2 months ago | like reply | 0 likes

searcher from University of North Texas

Very helpful. Thanks for sharing.

10 months ago | like reply | 0 likes

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