Company size to finance

by a searcher from Balamand University

6 months ago

My question is addressed to individuals who are searching, in the lending space, M&A consulting space, etc...

In your experience, what EBITDA range makes a target company easier to raise debt and equity for to acquire?

And what's the minimum threshold where any lower EBITDA makes it more difficult to finance?

Thank you.

0 likes
82 views
2 comments

lender from Eastern Illinois University

Agree with ^Searchfunder member‌. Asset light deals most Banks will push towards SBA financing or want significant equity. That will allow you to do deals depending on equity and seller financing from about $5.5 million to $7 or $8 million using just SBA financing. There is a pretty large gap in the market from $5 million to $20 million loan size where there just are not as many lenders and the equity requirements are significantly more.

6 months ago | like reply | 0 likes

searcher from University of Maryland at College Park

Depends quite a bit on the particulars of the transaction, but in general much is driven by the senior debt. Asset light, cash flow deals like home care that are not SBA eligible (e.g., more than $5MM or otherwise not eligible) but under $10MM are a difficult slice of the market. In general EBITDA over $3MM becomes easier to finance, particularly when there are strong margins and good historical CAGR. There are many variables, such as credit analytics (debt to equity, DSCR, FCCR, etc.), balance sheet composition, deal structure, etc.

6 months ago | like reply | 0 likes

More on Searchfunder

Just Closed on My First Deal! Reflections and Takeaways for other Searchers

45,152 transactions are available on Searchfunder (now searchable by keyword)

Now everyone has unlimited IBISWorld access

Family office looking for traditional searchers

Examples of self-funded searcher websites

What are market terms for Seller Notes?

2 Best Ways To Find Motivated Sellers, Off-Market Deals

Sorry, but you are a broker's worst nightmare ... and how to fix it

Searchfunder is an online community and toolkit for searchfunds. Over 80% of those involved in searchfunds maintain a Searchfunder.com account to help them network, problem solve challenges, and keep up with the industry.

We maintain partnerships with database providers that make searching more effective, efficient and affordable along with features that help searchers find deals and investors and vice versa.