Funding a partial buyout of a 3PL business
February 25, 2023
by a professional in Nashville, TN, USA
I have a client that is looking to acquire 80% of a 3PL business with a $6MM EV. It's our understanding that SBA loans requires 100% buyouts and that many conventional lenders avoid partial buyouts. Does anyone have any suggestions or recommendations of lenders who might support a partial buyout of a 3PL business?
from The University of Chicago in Chicago, IL, USA
1) For small acquisitions, "direct" buyout of partial interest is not possible regardless of SBA or non-SBA IF THERE IS LEVERAGE. The primary reason: how do you service the debt?
2) However, post-acquisition partial ownership by current owner (which is not the same as partial buyout), can be achieved in two simultaneous steps as follows:
a) A NewCo buys 100% of the business,
b) The buyer and the current owner participate in the equity capital stack of NewCo.
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA