How do you usually structure acquisitions under $10M

investor profile

August 18, 2025

by an investor from Southern Illinois University at Carbondale in San Juan, Puerto Rico

For those working on acquisitions between $1M-$10M, what are the most common components you see used to structure a deal?
The way I usually think about it is cash at close, seller notes, SBA financing, earn outs, and some form of rollover or outside equity.
I am curious if those really are the big five or if you often see other pieces play a role such as private lenders, mezzanine, or convertible notes. What has been most common in the deals you have worked on? Thank you
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Reply by an intermediary
from Clemson University in Raleigh, NC, USA
The SBA has already authorized guarantees up to $10M for manufacturing companies. This was propsed in late 2024 by myself and Steve Mariani. We are in continued discussions with House and Senate leaders to expand this to all industries. The language has been drafted and is being circulated for review and vote.
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Reply by a professional
from University of Michigan in Detroit, MI, USA
Hi ^redacted‌, I'm often guilty of talking about deals between $1MM and $10MM as if they are monolithic. The truth is, a $10MM deal is a very different beast, from, say, a $2MM deal. Remember that a 7(a) SBA loan typically caps out at $5MM. So once you're above that cap, you have to find other sources of capital to fund the deal, either equity or debt. Nonetheless, I will attempt to answer your question. Typically, most self-funded searcher deals are a mix of cash on close and seller financing. The cash on close is usually a mix of an SBA loan, sponsor equity, and investor equity. Sometimes, the sponsor may include an indemnity escrow or holdback. Sometimes, the seller financing is forgivable (note, you cannot do an earnout when it comes to SBA deals). If the deal is closer to $10MM, additional layers of debt may play a role. Hope that helps. Feel free to reach out at redacted if you have further questions.
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