Independent Sponsor looking for advice on equity raise for ~$3.8M EBITDA acquisition

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by a professional-accounting from Oxford Brookes University
in Karachi, Pakistan

7mos ago

Independent Sponsor looking for advice on equity raise for ~$3.8M EBITDA acquisition

Appreciate any advice/input. The Deal: I have sourced an established (20+ years), privately held business for sale via an online marketplace. TTM Adj EBITDA: ~$3.75M Valuation: Under LOI at ~3.5x Structure: Buying out majority owners WHILE minority owners retaining equity and staying on in executive roles. I will step in as Cheif Exec/President. My Background: 20 years as an operator (President/SVP level). I have deep experience and specific talent/customer contacts in this industry. The Funding Gap: The deal structure includes significant seller financing (highly favorable terms, payment holidays) and seller rollover. Total Uses: ~$9.5M - $10M Debt: Confident I can source the senior debt required. Equity Needed: I am looking to raise ~$1.5M - $2M in outside equity (in addition to my own personal capital injection and seller rollover). The Issue: I've reached out to some small/niche PE shops, but I am finding this check size is too small to get their interest. The Returns: I've modeled this over 5 years with conservative growth assumptions. Because of the low entry multiple and deal structure, the projected returns are exceptional (10x+ MOIC). I believe I'm getting the business at a great price (owners motivated to sell) and it’s a business I know well. I am struggling to find the right pocket of capital for a check size this small.

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reply by a professional 6mos ago
from University of Notre Dame in New York, NY, USA

Thanks for the tag ^redacted‌. Anon- Happy to chat. I’m on the legal side now, but did a stint in PE and a large swath of my client base are independent sponsors. You’re kind of in the “tweener” space, but there’s a handful of SBICs that would likely provide a one stop dent/equity solution for something like this. Happy to chat more- shoot me a note redacted

reply by a searcher 6mos ago
from University of Pennsylvania in New York, NY, USA

Happy to take a look (I’m investing ~$100-500k per opportunity) and potentially help steer you in the direction of other investors (depending on whether the business is a fit)