I need 10% equity for my deal, what do you think?

Hi everyone,

I'd like your advice on how to complete this transaction.

I am currently post-due diligence for my first acquisition and showing my deal to the banks. I was planning on doing 50/50 or 60/40 debt to equity. The cashflow to debt ratio ends up being 2 to 2.5 with average interest rates.

The banks liked this loan to value because their max in Canada is general 70/30 for new clients in my industry.

My equity contribution was seller's equity (seller's finance) which is postponed 100% to the banks senior debt. The banks told me that as long as it is postponed by 5 years or more, they will consider it equity in the deal.

Then the banker said "but we do want your company to have skin in the game with us, we will require say 5-10% of the purchase price."

5% of the purchase price is equivalent to roughly 90k and 10% is equivalent to roughly 180k.

I have about 10k in credit card equity to contribute in my own personal name.

The seller is providing 30k to 45k in working capital and a bank account which is expected to have 85k after the sale. A total of roughly $115k to $130k.

Can I sign a purchase agreement and use that working capital/money in the bank as part of my equity portion to buy the business?

If not, or if that doesn't not work for whatever reason...

How can I complete this transaction? What would you do if you were in my shoes?

Thank you!