Looking at a digital marketing company with $800k SDE. Pros are a well defined niche, recurring revenue, growing sales over the last three years. Husband and wife owners, would need to hire a replacement for one of these roles, high client concentration (top 3 clients make up 59% of revenue, top 10 make up 85%) and under 25 clients total. Seller open to a short term earn out.

My assumptions are that due to the client concentration, using an earn out would be essential for a large portion of the valuation. I'm also assuming that it would be hard to find a bank to lend debt on this deal with an earn out and client concentration. Seller probably expects a valuation of 2-3X SDE. Even if they would accept 2X, I don't know how I'd bridge the gap between the earn out and my capital injection (say 10-20%). I wouldn't expect the seller to finance 80-90% of the deal with an earn out over###-###-#### months. I'd need to stretch that out longer. Maybe a mix of a short term earn out and a longer term seller note?

Anyone have any other suggestions for terms or funding such a deal? Thanks.