Market Fundraising Terms for Established $2M EBITDA business

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by a searcher from University of Texas at Austin
in Austin, TX, USA

9mos ago

Market Fundraising Terms for Established $2M EBITDA business

For a 30+ year old, highly-established $2M EBITDA business, what market terms can I raise from investors? I need to raise around $4M and want to retain as much equity as possible. Would 8%-10% preferred returns be enough to attract investors?

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reply by a professional 9mos ago
from The University of Texas at Austin in Austin, TX, USA

What type of debt are you using for the deal? Typically SBA backed deals will fall in the pref + step-up model. Non-SBA will be more of a MOIC or IRR hurdle basis (independent sponsor economics).

reply by a searcher 9mos ago
from State University of New York (SUNY) in Buffalo, NY, USA

Raising $4mm of equity puts this squarely in independent sponsor territory for economics. You’ll get 20% of proceeds after pref return (8-12%) and capital returned to investors with investors retaining 80% of the upside.