Their Price, My Terms
June 27, 2023
by a searcher from Wheaton College Illinois in South Carolina, USA
I am working with a seller, and great company, who has a real financial incentive outside of the transaction to receive an inflated "vanity" multiple. Business should likely trade 3-3.5x, they need to sell at 5x. They need some cash upfront but are willing to accept my terms. What are the most aggressive terms and structures that could turn this a fair deal?
For context, I can have conventional PG'd financing on ~25% of the 5x purchase price to get the seller the cash they need.
from The University of Texas at Austin in Dallas, TX, USA
The most aggressive way to achieve that purchase price is to play games with the earn-out. Make the earn-out unachievable such that you never have to pony up for the $'s, but headline value if still $25 million.
Another gimmick could be to place 0% rate, 20-year non-amortizing debt on the company, but that's less appealing if you ever have to sell or merge.
from University of Pennsylvania in Atlanta, GA, USA