Avoid personal guarantee?

searcher profile

June 02, 2025

by a searcher from University of Pennsylvania - Philadelphia in New York, NY, USA

As title suggests, are there any alterantives to raising debt that's linked to a personal guarantee? For context: * Conservative capital structure: I'm not looking to "max lever" my acquisition (i.e., fine with lower debt levels as multiple of EBITDA or LTV) * Other terms: I'm fine with paying higher rate or incurring worse terms (e.g., financial covenant) to avoid PG * Business: High quality business with ~$1-2m EBITDA, recurring revenues, etc. (i.e., not buying a B-quality business for a low price in a "max leverage" context) * Acquiror: Acquiror has perfect personal credit and is generally underwriteable (e.g., high integrity and competence) * Deal type: Self-funded search in which acquiror is funding a significant portion of the equity check (~$1.5m) Side notes: * I fully understand why lenders highly value PG's. I'm just very focused on fleshing out alternatives to PG's, as I genuinely dread the downside (but real...) scenario of a bank going after my family's personal assets. * I also understand that the vast majority of searchers use SBA debt with PG's - goal of this post is to flesh out what it would take to not do that
4
17
364
Replies
17
commentor profile
Reply by a searcher
from Virginia Polytechnic Institute and State University (Virginia Tech) in Blacksburg, VA, USA
It’s very unlikely that you’ll be able to avoid a PG. If you can’t get comfortable with it, I’d recommend you not waste your time on M&A.
commentor profile
Reply by an intermediary
from The University of Texas at Austin in Dallas, TX, USA
I have a lender that we work with that stands in place of SBA and requires no PG. Please reach out to me here - redacted
commentor profile
+15 more replies.
Join the discussion