Does anyone have experience using revenue-based business loans?
October 19, 2022
by a searcher in Orlando, FL, USA
I am submitting an IOI on a Sports Publishing company and I would like to use creative financing to finance part of the deal. The company has about 70% of its revenue in annual recurring revenue (ARR). Please note that this company has been in business for 35 years.
Has anyone used a revenue-based business loan to finance part of the acquisition of a business? If so, what institution did you use, what did the underwriters look for, and what was the multiple they put on the company's ARR?
If anyone has any other creative financing strategies tied to ARR, please feel free to share! Thank you!
from University of Southern California in North Palm Beach, FL, USA
This is an instrument that provides a means of participating in a business through a royalty on its gross revenue.
Application In real estate, a similar concept is a participating lease. Use an RPC to finance a company, make (and secure) a loan or provide a guarantee. You can use it to pay for services and goods. RPCs can be secured, unsecured or guaranteed by third parties. They can have a minimum or maximum payment and can be for an open or a fixed time. They can scale up or down, and be convertible into some other security. They can have a payment termination price, be assignable or non-assignable and can require that payments be made only by or to a specific recipient or bank.
The above comes from my creative financing book: https://partneroncall.com/creative-financing/
from University of Toronto in Toronto, ON, Canada