Funding an acquisition in Canada - reasonable expectations for LTV debt?

by a searcher from British Columbia Institute of Technology

Jan 11,2023

Hi everyone,

I finished a brief run through of SIG's Self Funded Search Study and it made me curious if the debt side of the transaction is comparable to a Canadian transaction. The study found 44% of respondents who acquired a company between $500k-$999k EBITDA (where I am searching) were able to leverage between 80-89% LTV 

Most of that debt was covered by an SBA loan - I think about 10-20% total debt was through seller notes

Has anyone had experience with LTV percentages in that range - or close to that range - in Canada, and what bank/institution/product did you utilize to complete the transaction? 

Thanks!
Chris

PS - Thanks to the guys at SIG and the Acquiring Minds podcast ^Searchfunder member‌^Searchfunder member‌ ^Searchfunder member‌Searchfunder member‌

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5 comments

searcher from British Columbia Institute of Technology

Thanks for all of your feedback! ~70% is pretty good but those effective rates that ^Searchfunder member‌ stated are scary. Plus BDC products sound pretty restrictive on debt repayment. What do you guys think about using LOC to finance the debt portion? I have some RE investments that I took LOCs on at the peak of the market in case I ever needed it for investment purposes.

02/22/2023 | like reply | 0 likes

searcher from Symbiosis International University

50-90% depends on industry and your deal quality. BDC is premium. Schedule A and B banks are best for single deal.

02/21/2023 | like reply | 1 like

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