What's your sweet spot for purchase price? And for your & investor equity vs debt %'s?
Considering 2 deal levels, using these assumptions:
- c.$3m acquisition funded by a $1m personal investment and $2m SBA loan (estimated 4x multiple, 100% equity)
- c.$10m deal backed by the $3m and search funds (estimated 6x multiple, 30% personal/loan equity with a 15% step-up)
Running basic numbers based on hopefully conservative 10% growth rates: Deal #1 and# 2 come out even after 5 years. Deal #2 comes out ahead of deal #1 after 10 yrs by 25%
Assumptions can vary but still....not as big a gap as I expected from the very different deals.
Interesting for folks to share thoughts on their preferred deal values & personal/investor/debt %'s.
Helpful if you identify if you're commenting from an investor or a searcher perspective, or both.
Thanks for any input.
Symbolically, my bank likes seller financing as it implies the seller has a positive outlook on the company and buyer. The seller has a vested interest post-close and the its take pressure off senior debt service.
At the end of the day, there's many good ways to structure. If you want to discuss specifics, my direct contact info is --@----.com or###-###-#### .