Premium said:
cgh1999 said:
Lots of variables here. How much do you put down?
We have three homes with about $500K equity between the three. We could sell them all, but would prefer to keep the one producing nice cash-flow. Without selling, we wouldn't have more than about $100-150K cash.
What is the cash flow leverage on the loan as well as the collateral?
Hardly any debt in the residual based service business. Because such small margins, we use outside partners to finance our A/R and we manage the risk through credit insurance. With the owner leaving the owner salary / company profits leaves quite a bit to pay back towards a potential loan.
What industry? Your experience? Etc.
Family business, started in 2007 from parent who has been industry a long time. I've been here about 8 years and have essentially been running things for the last year or two.
Could go from low 3's to mid 5' s on a floating rate.
When it comes to acquisition financing options in cases like you've described here, there are a handful of SBA lenders out there who absolutely love these types of employee buyouts by family members - these loans offer the lowest global risk profile to the lender, so they will really offer some outstanding terms.
I've worked on one not too long ago where a son was able to buy out his father with no money down, just using the equity on the balance sheet as equity for the loan.
I'm happy to pass along a couple of trusted lenders' names to you who can really get into the weeds with you and answer your questions with a lot more specificity that I can. Or if you'd like to pick my brain, feel free to reach out. My email is jeremy at sigma mergers dot com.