I've been researching the costs associated with the "self-funded" acquisition method. From what I gather so far, the costs are:
- $XXX search costs (varies person to person)
- $5,000 fund setup fees
- $35,000-$60,000 legal fees
- At least 1% down payment. Typically, 10% is expected, but, per my research, it is not unusual to find funding for 9% of this.
If above assumptions are missing something, or need correction, please correct me!
My main question, however, is on how to fund as many of the above costs as possible? From what I've gather so far:
- it helps if the business is so attractively priced that the bank is willing to use it as collateral
- utilize SBA loans
- utilize seller financing
- seek investors to cover the gap
While I have the bullet points down, I am having trouble understanding cohesively how this is supposed to work? For example, assuming I find a business for an attractive price, SBA loans 90%, do I then reach out to the banks to get a loan to cover as much of the down-payment as possible? Do the banks will always ask that a piece be covered via seller financing, with banks getting priority of repayment? Or are banks not involved at all if the SBA is involved? Also, what types of "investors" to look for, I assume traditional search investors wouldn't be interested?
If you could point me to any resources on this topic, I would really appreciate it!
Thanks in advance!