Thoughts on making an acquisition through a family business?

April 30, 2025

by a searcher from University of Pennsylvania - The Wharton School in Philadelphia, PA, USA

Any thoughts / experiences on making an acquisition through a family business? Either as a bolt on to the family business or as a vehicle to acquire something unrelated. Would this disqualify someone from leveraging SBA loans? (Unless the said family business is simply acting as an investor in the individual looking to acquire). Any other considerations from those who have thought through this avenue?

0 Likes

12 Replies

98 Views

Replies

Reply by a searcher
from Babson College in Reno, NV, USA

^redacted‌ thanks for the tag. I'm trying to do something similar with my acquisition. I'm not sure what specific questions or concerns you have, but from what I understand, this will not disqualify you from an SBA loan. On my deal, my family members will only have 10% each so they will not have to provide a personal guarantee on the SBA or any other type of loan. I'm not sure about the structure of your deal (i.e. whether they're putting up capital or you're gifting shares; whether they'll be working for the business, etc.), but you definitely want to consult with your lender(s), your attorney, and your tax accountant, and explain what you're trying to accomplish.

Reply by a professional
from Seton Hall University in Morristown, NJ 07960, USA

^redacted‌ - thanks for the tag. I think I would lean on the experiences of the bankers/lenders on this question. If you can acquire the newco as a subsidiary of the family business, there's a lot of opportunity for shared expenses and increased profitability. If it truly is a separate business, an SBA loan should be able to be approved. But if the family business owns a larger percentage then you'd have to worry about the family business being on the hook for the loan.

+10 more replies.

Join the discussion