ACQUIRED A $1MIL+ EBITDA BUSINESS THANKS TO MATTHEW DOLSKY AND BYLINE BANK!
Searchers and Service Providers – Thanks for your support over the last two years. Due to a strict confidentiality clause, I cannot celebrate this success with you, and I unfortunately cannot publicly disclose my name or the target company that was acquired. Searching is a long, lonely road. And regardless of what anyone says it is a pretty shit experience; constantly sifting through who is real and who is just pretending.
Last week I acquired a $1mil+ “old school”, family owned, manufacturing business that has been around for over 50 years. The business generated 7 figures of EBITDA with many customers in the Fortune 500 who have remained customers for 20, 30 and even 40 years. But like many businesses that have some component of project based and/or fluctuating customer buying patterns, this company’s revenues/profits can shift +/- 20% in a given year. Throw in Covid-19 and the last two years were down slightly from 2018, but well within the historical “normal” fluctuations of the business. I knew this because the Seller provided 20 years of accounting firm prepared financial statements.
Many banks flat out said “we will not be able to get this deal through our risk committee regardless of the fact that the business has 20 years of monthly externally prepared accounting firm financials with notes. The slight decline, even though it is easily explained and normal for the business, is just a non-starter for our committee. I will not be able to convince them otherwise”. Or “we have a lot of other deals on our plate that are sexier and are growing 20% per year, like SaaS businesses. Which means if I do your deal Mr. Searcher it is going to be as a favor and you will get what you get from us, if you get anything.”. Other SBA Lenders said, “we cannot use SBA 7a financing with a performance based, Forgiveable Seller Note structure, even though it decreases the Bank’s, the Buyer’s and the Federal Government’s risk.”.
I get it. The positive was I had built relationships with enough SBA 7a Lenders that individuals were straight up with me and gave me their real view so that I would not be holding my breath or wasting my time or their time with a bank that could not get the deal done. For that I am grateful.
^Matthew Dolsky got it, too. What I like about Matt is that he always gave it to me straight when I reviewed a potential acquisition with him. He spent the time to tell me what he liked and more importantly didn’t like, about the various deals I brought to him over the years. He offered input on structuring with an eye on what can and cannot get done at Byline Bank and/or the SBA. He was also very calm, cool and collected and shared what he thought was fair for all parties given the particular set of facts at play, even if his view went slightly against my emotional state at the time when I was immersed in the back and forth of the negotiation with the Seller. He told me what I needed to hear, which was not always what I wanted to hear.
Matt and Byline Bank understand that in the SBA 7a Searcher M&A space; every deal has hair on it. Every deal is predominantly an airball (goodwill > assets business + assets searcher) that no conventional lender will touch. In this case, Matt was so good at his job that from the execution of the Letter of Intent (which he helped to construct), to the Bank Term Sheet to the Bank Credit Committee Commitment Letter, not one term or number changed. Not one. No bait and switch. No going back to the Seller and blaming changes to an executed LOI on the bank’s risk committee. No blowing up the deal.
Even Matt stated that this was not always the norm. I believe him, but I also think it is a testament to getting to know your banker. The Searcher being upfront and honest with guys like Matt Dolsky and understanding which SBA Lenders are really in the SBA 7a Searcher M&A ball game and which just want to be. Above all else, Matt Dolsky is upfront, honest and with all his years of experience, he knows what deals he can get done under what terms and what he cannot get done while also throwing in a healthy dose of creativity. Matt Dolsky is a big reason this deal got across the finish line with flying colors. My deal was by no means easy or straight forward, but it also wasn’t a “dog with fleas”. No deals are perfect, but some of the most marketed banks on Searchfunder had a real hard time with this deal. To put icing on the cake, Byline Bank also provided a real Working Capital Line of Credit, just like a conventional lender would do.
So, if you are contemplating using an SBA 7a loan to structure your deal, I highly recommend reaching out to and building a relationship with ^Matt Dolsky at Byline Bank. If the situation is right, he can put the two of us in contact behind the scenes and I would be happy to help you if I can.