How will you structure a Gap Equity?

The issue with raising larger equity checks is that the universe of self-funded search investors who are ok with 20-30% equity is small and the available pool of capital is very limited. Generally speaking, self-funded search works best if the equity check is small. Your best bet is likely to go with an SBA lender who does companion loans. You may be able to get up to $10M of debt, but this will likely only work with a low multiple deal that has very consistent profitability over the past 3 years. Your other option would be partnering with an SBIC fund who provides both debt and equity (typically requires $2M+ EBITDA).

Live Oak Searchfund lending did a panel on EQUITY structures in SBA loans. DM and I'll send you links. ^Searchfunder member‌ ^Searchfunder member‌ ^SMB LAW GROUP ^Searchfunder member‌ ^Searchfunder member‌ were panelists/moderators.