Hey Searchfunder.

I am working on mapping out a negotiation on a high recent earnings and high asset value company. The owner’’s team (non-M&A lawyer and accountant) is asking 10M based on a 5M assets, 5M goodwill valuation. I understand this is a “double dipping” valuation but it’s my starting point.

Weighted average EBIDTA for 22,23,24YTD is $1.5M. ‘23 was $2M and 24 is on track for the same so I can see the argument for ignoring the 22 number.

The asset liquidation value is 3.5-4M.

Based on this info I am looking for feedback on these approaches:

1. offering 8M without real estate.
5M SBA, 1-2M seller financing, 1-2M secondary bank loan, remainder being private investment.

2. offering 10M with real estate.
same as above except longer term on the SBA.

questions:
- if Real estate is $2M does that take my
entire SBA term to 25 years?
- will SBA be ok with a 2 year EBIDTA valuation with explanation?
- what terms are you seeing on private investment? $250k-1M notes