SBA Deal Structuring w/ Rollover

by a searcher from New York University - Leonard N. Stern School of Business

1 year ago

I know the SBA rules are still in draft, but was curious how folks have been thinking about transaction structure in light of these rules. One thing on my mind is retaining a majority (with meaningful equity rollover from the seller).

To illustrate, let's say you are considering a $1mm acquisition ($1mm is Uses in all scenarios). 

1. Traditional Funding Sources:
900k SBA
100k Searcher

2. 20% Rollover Sources
200k Seller
720k SBA
80k Searcher

3. Example Majority Ownership Scenario Sources
50k Seller Rollover
150k Seller Note
720k SBA
80k Searcher

As you'll see, searcher ownership in #1 - #3, are 100%, 29%, 62%, respectively.

I have a few thoughts to retaining a majority (#3 is one workaround that I was thinking through), but curious if others have run into this as well. Happy to discuss directly if easier. Thanks!

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4 comments

lender from Eastern Illinois University

I would love to have a discussion and go over the various options you are considering. Also, the option to do a partial business buy-out is available now. We do have lending partners looking at transactions with this opportunity. I am more than happy to discuss what is available from the various lending partners we work with. You can ping me here or anytime at --@----.com Thank you.

1 year ago | like reply | 0 likes

lender from California State University, Sacramento - College of Business Administration

Happy to discuss our current thoughts on structures --@----.com We hold weekly sessions on sba structuring. Stock sale for the partial buy-in is the current thinking. Happy to talk about pros/cons with a partial vs a 100% buy. Lots of deal specifics will matter

1 year ago | like reply | 1 like

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