Our Typical Client

Small and Midsized Business Acquisition Financing

Are we right for you?

We help entrepreneurs, managers, and sponsors finance acquisitions in the small, lower, and middle-market segments. Our specialty is funding transactions valued between $400,000 and $25,000,000.

We can work with buyers who have:

1. A Letter of Intent (LOI) or are about to submit one

The reason for this requirement is that without an LOI, there is nothing for us to offer. To provide you with the information you need, we must know the specific information outlined in the LOI. This includes information about the transaction's specific amounts, terms, and time frames.

In our experience, evaluating an opportunity without an LOI leads to unproductive speculation. Ultimately, it consumes a substantial amount of time and does not produce tangible results.

Well-crafted letters of intent often include a contingency clause that states that the offer is conditional on obtaining financing (among other things). This clause should allow you to look for the right financing for the transaction. A word of caution: consider consulting an attorney specializing in acquisitions when crafting an offer.

2. Industry experience (or can hire a manager)

As a general rule, we work with individuals who have experience managing the type of business they want to acquire. However, we understand that not everyone can meet this requirement. If you don't have enough experience yet, we should be able to work with you as long as you hire a manager from the existing business for a period of time.

3. Contribute a meaningful equity injection

A meaningful equity injection is a requirement for every transaction. The size of the contribution varies by market segment.

a) Transactions under $10,000,000

Transactions under $10,000,000 typically require a 10% equity injection. These funds must come from your own sources and cannot come from loans or owner financing. Many clients use personal savings or investments to fund this component.

In some cases, the buyer's contribution can be reduced to 5%. However, this can be done only if the seller provides at least 5% of financing and if they agree to a standstill on that financing for the life of the loan. In our experience, getting a seller to agree to a standstill is difficult.

b) Transactions over $10,000,000

Due to their size, transactions over $10,000,000 don't have a defined equity injection percentage. Instead, buyers are required to make a meaningful contribution to the transaction. The contribution amount varies by transaction and is designed to show that the buyer/s have a personal stake in the transaction.

Business Acquisition Case Study

Commercial Landscaping Company

This article presents a case study of an acquisition of a small landscaping company.

The landscaping company was selling for $700,000 and was acquired using a conventional structure. In this study, we cover the following:

Note: All names have been changed to protect the participants' privacy.

Schedule a Transaction Review

Please fill out this form with some basic information about your transaction. One of our credit managers will email you to get more details and schedule a time to discuss.