[New]: I know of only one guy doing THIS right now...

lender profile

November 15, 2022

by a lender from Baylor University - Hankamer School of Business in Houston, TX, USA

Folks are calling it a "retro deal." It's basically when buyers and sellers agree that the best thing for both parties right now, is to hop in a time machine and travel back six months into the past -- back when rates were low and multiples were hefty.

The concept is simple. Buyers and Sellers are stuck in a stalemate.

Think about it: Buyers don't want to pay 7-9% (floating) on a traditional bank loan, especially when rate hikes are showing no end in sight. And, Sellers don't want to sell their businesses right when multiples are shrinking.

So here's the win-win. The Buyer agrees to value the business using the hefty multiples from the 'glory years.' IF (and only if), the Seller agrees to take on a significant Seller Note payable at the lower interest rates that all of us miss.

It's retro. It's vintage. It's a throwback. It's whatever you want to call it. But most importantly -- it might just get your deal done and dusted.

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commentor profile
Reply by a searcher
from Dartmouth College in Huntington Beach, CA, USA
Definitely an interesting concept given the market environment. Similarly, would be interested to see if anyone has done this, what types of businesses/partners have an appetite for and return profile for this kind of deal, and what expectations shift for something of this profile.
commentor profile
Reply by a searcher
from Northern Alberta Institute of Technology in Edmonton, AB, Canada
I love the concept. Especially if the firm you are acquiring has pricing power, then current earnings should be going through the roof compared to a year+ ago, which would help offset the high selling price of the firm (given today's rate environment).
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