Seeking Senior Lender 3-3.5x debt/ebitda (90% recurring, 5% churn, 95% fcf)

searcher profile

February 22, 2023

by a searcher from Harvard University - Harvard Business School in New York, NY, USA

We're seeking a senior lender for a deal we're working on. The business is ~$2m of EBITDA at 5.5x purchase price with 90% recurring revenue, a 95%+ gross revenue retention rate, and 95% FCF conversion. Average customer tenure is 10 years, with strong customer diversification (top customer = 5% of revenue).

We are seeking a senior lender to come in at 3-3.5x. We've gotten a few initial indications but want a lender that is supportive of growing the check over time through future acquisitions. Also, we cannot use SBA as there is some seller rollover.

Please post your email in the comments and we will reach out.

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commentor profile
Reply by an investor
from Seattle University in Seattle, WA, USA
You will have to look at alternative lenders (private debt funds, SBICs, ect). Traditional bank debt willl be a problem. Hard to get a bank to go over 3x on a ub $10 Million in EBITDA deal because then it become an HLT that has additional regulatory reporting. Another l with your proposed structure is that most lenders are looking ofr 40-50% equity in the deal.
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Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
We would be more than happy to take a look. We are a Commercial Loan Brokerage shop with over 500 unique funding partners and we do a substantial amount of business acquisition financing. You can reach me here or directly at redacted
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