Company size to finance

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by a searcher from Balamand University
in Nova Scotia, Canada

2yrs ago

Company size to finance

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.

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reply by a searcher 2yrs ago
from University of Maryland at College Park in Annapolis, MD, USA

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.

reply by a lender 2yrs ago
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA

Agree with ^redacted‌. 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.