Funding acquisition of family business

by a searcher from University of California, Berkeley

2 years ago

My uncle owns a land-use/development consulting business and is looking to retire. I work for him currently (along with 3 other employees). The business is fairly small ($1M revenue), but he wants to include approx. $6M worth of land (with various entitlements) in the sale. He'd carry a note for some of the cost and stay on for 2-3 years on a part-time basis (to finish out projects with larger clients). I don't have the personal balance sheet to buy the company (and/or PG any debt). Any tips on where I might start looking to fund an acquisition? The business throws off healthy cash flow and the basis for the development properties is fairly attractive.

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7 comments

professional from Bentley University

Hey, sounds like an interesting opportunity. Where are the business and land located?

2 years ago | like reply | 0 likes

searcher from Harvard University - Harvard Business School

In addition to the prior comments, this seems like a good fit for creative deal terms. For example, maybe you could include the real estate in the sale, but with a delayed closing date with some price appreciation built in. In your position, I’d try my best to avoid outside equity because it’s the most expensive type of capital. Also, a situation like this could be a great one for a large seller note.

2 years ago | like reply | 0 likes

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