Hi Everyone,

Asking for a fellow searcher who is looking at a small aerospace distributor and is prepping an IOI.

Asking price: $1.6M
Revenue: $5.1M
Adj EBITDA: 357K (7.0%)
Inventory: $325K

Seller owns property and would lease it to buyer at market rate.

Revenue Concentration:
60% Large Aerospace SBA8(a) set aside (for disadvantaged owners, which the searcher qualifies for)
28% Various
12% Large Aviation Defense Contractor

I also ran these through a model and the DSCR came out to 1.25 based on:
$1.443M, or 80% SBA7(a) @ Prime (7.5%) + 2.25%; 10 year amort
150K Cash to Balance Sheet
$54K (or 3%) in txn fees & expenses

Capital Stack also includes:
10% Seller Financing @ 10%
10% Preferred Rate

1. Is the valuation multiple of 4.5x reasonable, considering the above?
2. Should we expect the revenue concentration to be an issue for an SBA lender?
3. Do you have recommendations on how to structure/negotiate this type of deal?

Thank you all, in advance!