I am working with a seller, and great company, who has a real financial incentive outside of the transaction to receive an inflated "vanity" multiple. Business should likely trade 3-3.5x, they need to sell at 5x. They need some cash upfront but are willing to accept my terms. What are the most aggressive terms and structures that could turn this a fair deal?
For context, I can have conventional PG'd financing on ~25% of the 5x purchase price to get the seller the cash they need.
Their Price, My Terms
by a searcher from Wheaton College Illinois
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The most aggressive way to achieve that purchase price is to play games with the earn-out. Make the earn-out unachievable such that you never have to pony up for the $'s, but headline value if still $25 million.
Another gimmick could be to place 0% rate, 20-year non-amortizing debt on the company, but that's less appealing if you ever have to sell or merge.