Thoughts on how investors think about personally guaranteed debt

by an investor from Skidmore College

4 years ago

Wondering if any investors or searchers have some thoughts on (or have run into situations where) by virtue of deal structure and/or who else is participating in the deal, specific investors are required to personally guarantee debt for a deal to get done. If so, would be curious how those investors are compensated for that additional capital at risk via preferred equity, distributions, or similar if they choose to participate.

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5 comments

investor from Thomas A. Edison State College

If they want to own 20%+ based on what they're investing, just have them do a 10% equity grant with a penny rate option they can exercise any time down the road for the remaining stock they ideally want to own. You can have them exercise it a week after closing if you want. IE, they want to own 25%, you give them an equity grant for 10%, and a stock option for 15%. Email with any questions, I've done several SBA acquisitions myself. --@----.com

4 years ago | like reply | 0 likes

investor from Skidmore College

Appreciate the thoughts thus far, thanks guys

4 years ago | like reply | 0 likes

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