Debt without personal guarantee

by a searcher from New York University - Leonard N. Stern School of Business

3 months ago

Assuming an acquisition of a relatively stable business at a 4.0X EBITDA multiple - is there an equity stake level above which it would be possible to secure a loan without having to guarantee personally?

I would be very interested in reading about deals that have been structured with equity, seller notes, and debt where the debt did not include a personal guarantee. 

If there are such examples, it would be most helpful to know the percentage of equity, seller note, and debt relative to the transaction's EV.

Thanks,

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searcher from University at Buffalo, State University of New York - School of Management

Keeping talking to banks. You don't need a PG except SBA. That's conventional wisdom. The bankers are reading a script. Their job is to get as many things to cover their ass. You don't have to say yes.

2 months ago | like reply | 0 likes

searcher from University of Pennsylvania - The Wharton School

^Searchfunder member‌ it depends on the circumstances. There is a number of family offices that will provide senior debt / mezz financing with no PG. There isn't a set criteria given that each family office have their own investment criteria. I have seen family offices open to providing as little as $1M of debt financing so size is not always a critical factor. As long as the lender is comfortable with the credit profile and the amount of the debt sought moves the needle for them, then they will listen. Let me know if you want to chat more about it.

3 months ago | like reply | 1 like

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