Conventional Search Fund Aggregating Multiple Targets

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December 28, 2023

by a searcher from Dartmouth College in Los Angeles, CA, USA

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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Reply by a searcher
from St. Lawrence University in Vermont, USA
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...
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Reply by a searcher
in Los Angeles, CA, USA
Can be done, most likely to be cross collateralized if using a single lender.
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