How to Finance $10M+ deals?

October 27, 2023

by a searcher in Rindge, NH 03461, USA

Hello All,
How do people fund deals beyond $10M? (beyond SBA level). Or to be more specific, what types/links to financial institutions that lend to $10m-50M deal values? I have some larger deals on the horizon. Need to lay the ground work with $ sources. Any suggestions? Anyone what to team up on larger deals? Thanks! Sven

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Reply by a searcher
from Northwestern University in Chicago, IL, USA

Happy to chat if helpful - but most typically this will involve raising investor equity and having terms that look a bit more like a traditionally funded deal (you get ~25% of the equity). The usual search investors would almost certainly take a call if you had a deal in hand - and you could definitely negotiate up a little bit. On the debt side if you are over $5M EBITDA there are plenty of private credit funds that would take a look and banks will also lend in a non-SBA capacity. If you are trying to keep 70+% of the equity you would have to get very creative with structuring or an unbelievable price...

Reply by a searcher
from Virginia Polytechnic Institute and State University (Virginia Tech) in Blacksburg, VA, USA

Sure, what you need to do here is construct a capital stack that contains about 60% senior debt, a significant seller note and/or rollover equity, and use a combination of your/investor capital and mezzanine debt from a private credit firm (need EBITDA > $5M) to plug the gap. It’s not as hard as you’d think. However, you’re personal experience in the industry and running a business are going to be hugely important. If you’re not experienced running a large operation, you’re unlikely to be successful.

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