Supportable Valuation for Debt Financing

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by a searcher
in New York, NY, USA

1yr ago

Supportable Valuation for Debt Financing

What are the maximum supportable valuation multiples (3x? 4x? 5x?) in the following scenarios? - Initial platform acquisition, with 90% SBA debt + seller note, and 10% equity down - Initial platform acquisition, with 90% SBA debt + pari passu debt + seller note, and 10% equity down - Tuck-in acquisition, fully debt financed with incremental SBA debt - Tuck-in acquisition, fully debt financed with incremental conventional debt (once the SBA $5 million limit has been reached) Assume no maintenance capex

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reply by a lender 1yr ago
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA

Not sure what you are looking for here. It would help to understand the metrics of what you are buying. It can change quite a bit from deal to deal for what lenders will lend. Also, you mention 90% SBA but then include a seller note and 10% down. How much of a seller note is the seller willing to take? We have funded deals with purchase prices close to $10 million with a $5 million SBA loan and the rest equity and seller carry. We have also done deals with a $10 million purchase price and a $5 million SBA 7A loan and $2 million or more in Pari Passu financing. It all depends on what the deal looks like and what the cash flow can support. When Pari Passu is involved most lenders have much more conservative requirements for debt service coverage ratios then they do for conventional $5 million or less SBA financing. If you would like to discuss in more detail I would be happy to do so. You can reach me here or directly at redacted

reply by a professional 1yr ago
from Northwestern University in Chicago, IL, USA

I'd be interested in hearing more about what you're specifically looking for in a deal. Let me know if you’d like to chat - I’d be happy to help! Please reach me at redacted