Just read a great post from ^Searchfunder member‌ on financing deals in the $5-$10M ent value range.

I've been looking at deals in this range, and am surprised that banks are willing to go to a 1.25 DSCR. From my perspective, this much leverage removes any margin of safety. While I intend to grow the business I acquire, I am aware of the risks that revenue can drop in short term if key employee of customer leaves.

I feel more comfortable with###-###-#### DSCR. Or course once multiples get above 4.5X (with my equity plus sellers note getting into the 20-25% range with 70-75% bank financing at 10.5% - 11.0%) my cash flow model gets very tight, in the###-###-#### DSCR range

Are there any self funded searchers who think I am missing something? Or is the bottom line any deals above 4x adj EBIDTA simply require Year 1 growth?