SBA financing for SaaS company that is a corporate divestiture

by a searcher from Babson College - F.W. Olin Graduate School

Mar 03,2023

We are evaluating a SaaS acquisition opportunity that is a corporate divestiture. In order to assess SBA financing options I'm told:

- Parent company would need to extract revenue and expenses for this business (that were reported in their corporate tax returns)
- For the prior 3 years (at least)
- Figures need to be provided on a monthly basis
- Parent company accountant needs to attest to the accuracy of these figures

Two questions:
(1) Can anyone please comment on whether this is correct - anything missing?
(2) Does anyone have a specific example of this type of extract that they would be comfortable sharing?

We're keen to minimize the back and forth with the company accountants, so want to give them very specific instructions and ideally a template/example.

Thanks in advance!

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intermediary from The University of Chicago - Booth School of Business

I have done few corporate carve-outs as an M&A Intermediary (representing sellers and buyers). As many have suggested this is challenging. In addition to P&L and BS, operational DD is important. Company accountant is unlikely to attest, and even if he/she does, it may not mean anything b/c all they can do is what the management told them. Despite all of this, there are ways to get the carve out done. happy to talk. DM me.

03/07/2023 | like reply | 0 likes

lender from Eastern Illinois University

I can attest from years of commercial lending these are very challenging deals to get done. I would recommend as already stated: 1) Accountant prepared profit and loss statement and balance sheet for the division; and 2) QofE to verify the accuracy of this information. This is likely the only way to have a shot at getting an SBA lender comfortable. Please let us know if you need any help with the financing. If you have some initial numbers it might be worth running a financing analysis up front to be sure it is even doable and you will qualify if the numbers come back as provided. I can be reached at --@----.com or here if you need assistance with this.

03/06/2023 | like reply | 1 like

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