SEEKING INPUT ON DEAL STRUCTURE FOR ASSET-BACKED LBO

Greetings SF Community!

I am an independent sponsor who is working on sourcing my first deal. I am leaning towards acquiring an asset-heavy manufacturing business with relatively high FCF, and using high leverage backed by the assets to obtain financing.

I've never done this before and am really curious to know what some other searchers who have done LBOs would recommend. I see the basics are that the SBA loan could provide up to 75% of the total EV not to exceed $5M, so I'm using the example of a target generating $1M EBITDA and 4x ETBIDA multiple, so $4M total EV. $3M is covered by SBA (75% noted above). If I did not want to put in any equity, can I get a deal done with 100% debt, which would require me to find the other 25% somewhere? I've heard of a seller note but haven't had time to look that up yet.

Thoughts?



share: