Debt Financing in Acquisition of Multiple Businesses

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by a searcher
in New York, NY, USA

2yrs ago

Debt Financing in Acquisition of Multiple Businesses

I am considering an acquisition of four separate entities. They are all related businesses that are operated by the same management team. Does anyone have experience with getting debt funding to finance this type of deal? $2m EBITDA less capex and we are looking for $4m-$5m of debt. I am mostly curious if (i) Lenders will have less appetite for this deal construct, (ii) Other obstacles I should be aware of heading into the process. Any thoughts would be much appreciated!

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reply by a professional 2yrs ago
from Seton Hall University in Morristown, NJ 07960, USA

I completely agree with ^redacted‌. Your post says it's the same management team but is the ownership the same? They may say you cant consolidate if ownership is different, but they can still provide combined financial statements since management is the same. And as Mike mentioned, you want to eliminate any intercompany transactions and see if the businesses still look the same...hopefully one is not supporting the other.

reply by a lender 2yrs ago
in Toronto, ON, Canada

I agree with Brad, any lender interested in funding would ask for consolidated financials if all entities operate in the same industry and are under same ownership / management structure.