Vesting Equity and Personal Guarantee Thresholds - Best Practices

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by a searcher from University of Calabar
in New York, NY, USA

6mos ago

Vesting Equity and Personal Guarantee Thresholds - Best Practices

Hey all, I am structuring an acquisition and want to stay under 20% ownership for lender personal guarantee purposes - I am an international that hasn't built up to the required credit history for PG, but with a very strong personal experience/background needed by lenders. I'm slated for 25% common equity vesting in three tranches: 8.3% at acquisition, 8.3% over time, 8.3% based on IRR. My questions: 1. Do lenders only count the equity vested at acquisition (8.3%) for PG calculations, or the full 25%? 2. Best legally acceptable ways to structure future vesting (time/performance) so it doesn't trigger PG thresholds. 3. Are there financial institutions that require under 25% ownerships vs 20% - how do I look out for them?

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reply by a lender 6mos ago
from University of Missouri in Denver, CO, USA

If you are not a legal permanent resident, you would not be able to have ownership in an sba deal. Not sure if that is the case here or if you are even using SBA, but just FYI