Conventional Search Fund Aggregating Multiple Targets

by a searcher from Dartmouth College

6 months ago

Has anyone successfully merged multiple businesses into a single entity prior to securing financing? 

I'm currently exploring the possibility of consolidating several high-growth prospects that offer seller financing, aiming to improve the financing terms by leveraging a higher combined EBITDA.

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2 comments

searcher

Can be done, most likely to be cross collateralized if using a single lender.

6 months ago | like reply | 1 like

searcher from St. Lawrence University

If the businesses are all going to continue to run separately, a lender might look at the combined collateral more positively. If there is any additional execution risk or other complexity added, I think you run the risk of not ultimately being able to get additional leverage. Good lenders could look at risk + complexity and become more conservative...

6 months ago | like reply | 1 like

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