Likely for those who have acquired a business via SBA loan without adding any personal financing but have also raised equity.
How have people structured their carry when, theoretically, the investors own 100% of the value of the business based on owning 100% of the equity?
Theoretically, could happen with 80% via SBA loan, 15% equity raise, and 5% seller financing. Is the easy answer that it follows the 80/20 typically seen in PE/VC?
Determining operator carry when do not put in own financing
by a searcher from Stanford University
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But, I think you said it best, "You need to do what is best for your particular situation." Let's drill down into the "situation" further. When having to borrow & do a PG, you really need to be mindful of where in the Business Cycle you are & how correlated the target is to the economy. Especially right now, as we blow past 128-months of expansion, the longest in U.S. history with an average of just 58.4-months. I agree, the objective is to own as much of your business as possible, But I'd rather own a slice of fresh watermelon than all of an old rotten grape. If the target is correlated & the market turns, the personally guaranteed debt isn't just the target's death sentence but your own when losing the roof over your head at the worst possible time. Any chance of survival will be eaten up by the debt service. Right now, I'd take the equity over personally guaranteed debt any day of the week. When the market turns, your equity investor just became your partner & you want a partner with more capital than you to help you "do what is best for your particular situation" vs. the black & white chopping block that severs your chances of survival. Once the market recovers, who cares if all you have left is 10%? The competition will be leveled, you're still in the game & have a chance to turn that 10% into something much bigger vs. having to start over after you've lost your home, credit, etc.
I got lucky because the underlying asset, the property, appreciated more than the business did once the economy recovered & after I had subsidized the debt service with anything I could just to keep from going into default. Then I sold the property, paid off the debt & had to eat every other penny of loss.
As far as alternative capital sources, if you have a good deal & are resourceful, there's an unlimited number of options out there. You just have to find them. I like working with family offices & have relationships with a handful of multi-billion single-family offices that will discuss creative solutions rather than being limited to a small set of instruments. They don't have to follow a mandate, if the deal is good, they can structure it however they want & have the luxury of rational, practical thinking to design something that works for both of you. They know that you are their source of returns & by crippling you, their only hope is to recover a percentage of their basis vs.. working with you to recover all of it plus interest. Revenue-Based Financing, while it's still fairly young, has a lot of potential & will become a good source for more than just growth capital. Hope I answered what you were looking for & sorry to be verbose.