Healthy DSCR for a Business acquisition today

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by a searcher
in Lawrence, NY, USA

1yr ago

Healthy DSCR for a Business acquisition today

Hi

Does anyone have any guidance on what type of DSCR in todays environment is achievable and what you should try and target in the construction services and manufacturing category up to a $5M purchase price?

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reply by a searcher 1yr ago
from State University of New York (SUNY) in Buffalo, NY, USA

You can get a deal done with most bankers above 1.5x. The closer you can get to 1.75x the better. I closed at ~1.8x and it still feels tight at times, especially since there’s mild seasonality in my business. Don’t forget that taxes are excluded from the calculation, but are a real cash outflow from the business.

reply by a lender 1yr ago
in Ponte Vedra Beach, FL 32082, USA

^redacted‌ What you as the buyers tolerance is for debt service minimums can certainly be higher than our tolerance as a lender, including what multiplier you are comfortable with based on the DSC of the company you're reviewing. I review and finance a lot of manufacturing acquisitions as well as expansion projects. Having a DSC of 1.15 is pretty common within the companies I review.