ANYONE HAVE EXPERIENCE CLOSING A DEAL WITH AN SBIC FUND?
Have 2 portfolio businesses already and a 3rd one under LOI/closing stage with SBA 7a. Adjusted EBITDA after closing the 3rd deal will be around $2.5M EBITDA. I've retained supermajority ownership and am not inclined to dilute until much later financing stages if at all possible. Dollar cap with 7(a) is having me move to greener pastures with financing options and I'm looking at various SBIC partnerships. Have several targets of $1-5M EBITDA that can be purchased for 3-4x EBITDA and I'm in various stages of financial and operational diligence with them.
I've been interviewing several SBIC funds to see what the best fit is. Due to the strong cashflow, low capex of my targets, the cashflow and structure seem to works out well partnering with an SBIC fund. Questions for people who've successfully nailed down a deal with one, few questions:
1) Did you use a senior lender on your acquisition raise, or was it solely financed by the SBIC?
2) What was the split in structure between equity/subdebt and/or unitranche debt?
3) How did the fund structure their equity investment? Coinvest with preferred/common waterfall, subdebt only with warrants?
4) How much equity did the SBIC fund look to own in the business after all was said and done?
5) If SBIC was for your first acquisition, what equity infusion did they look for from you/partners, and if it was for a later acquisition how much did they count as equity roll vs hard cash in the deal?
Any input appreciated.