Debt Financing in Acquisition of Multiple Businesses

October 22, 2023

by a searcher in New York, NY, USA

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!

Reply by a professional
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
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA

It should not be an issue especially coming from one seller. I think the only concern lenders might have is wanting to see some sort of consolidated financial statements if there is the moment or cash, revenues or expenses between the entities. Outside of that, we have done multiple acquisitions at one time. You can reach me here or directly at redacted if you need any assistance with the financing. Good luck.

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