Biz Acquisition Loans

[MtnElk]

Wondering if anyone here has ever taken out a loan for the purposes of acquiring a business, either in whole or for a substantial portion of ownership. If so, what route did you go: bank? SBA? Take equity of your home?

I might have a chance to finally acquire a 50% stake in a company I work with (I am their CFO and strategy lead), and I’m very eager to get it done if the (nearly always) absent partner finally wants to sell. But this is new territory for me as I started my company on my own with very little cash. This would require a substantially larger cash investment.

Just wanted to ping this group as I know we have quite a few business owners up in here, see the pros / cons of the route you all went

 

[grizzly_]

When we bought our business, we did Seller Financing with a sizeable initial payment. That's not always an option, but if the seller will carry the note, it's typically easier for you.

 

[MtnElk]

When we bought our business, we did Seller Financing with a sizeable initial payment. That's not always an option, but if the seller will carry the note, it's typically easier for you.

Should have clarified that the seller, if he chooses to do so, would be selling to the other partner and then I’d buy it from the partner that is staying. We don’t think the seller would want me buying it lol

 

[Moserkr]

Sending you a pm Mtnelk. With what I know its probably more appropriate.

 

[npaden]

+1 to what he just said. Especially with interest rates where they are now seller financed acquisitions are the best option right now.

Generally the seller is going to be very familiar with the company and more willing to take some of the risk without jacking up the interest rate.

As a partnership our buy outs are 100% seller financed at 0% interest for 10 years. Really helps with business continuity.

 

[MtnElk]

+1 to what he just said. Especially with interest rates where they are now seller financed acquisitions are the best option right now.

Generally the seller is going to be very familiar with the company and more willing to take some of the risk without jacking up the interest rate.

As a partnership our buy outs are 100% seller financed at 0% interest for 10 years. Really helps with business continuity.

There is a slight chance this works, but airing on the side of not getting his blessing to buy his share. But I could be wrong

 

[npaden]

There is a slight chance this works, but airing on the side of not getting his blessing to buy his share. But I could be wrong

Yeah, that for sure adds a wrinkle to it.

 

[MtnElk]

Sending you a pm Mtnelk. With what I know its probably more appropriate.

Thanks!

 

[BackofBeyond]

Wish I had great onsite to give, but my one and only experience was buying out my grandpa, which was financed behind his back by grandma.

Worked out really well for 18 y/o me.

 

[Ballistic]

I've done all of the above. Would absolutely do an SBA loan again if rates weren't so High. That is, unless you are certain you can eat beans and rice or cashflow substantially to pay the loan off in 24-30 Months. We did 7 years on the SBA for my first acquisition in 2015. The 3 companies I picked up in Q4 of 23' are all seller financed, but I'd built some street cred as an operator so the Private Equity firm that held them felt pretty good about the transaction.

That's all I can give you without knowing the nature of the company. Good Luck!

 

[Irrelevant]

Wondering if anyone here has ever taken out a loan for the purposes of acquiring a business, either in whole or for a substantial portion of ownership. If so, what route did you go: bank? SBA? Take equity of your home?

I might have a chance to finally acquire a 50% stake in a company I work with (I am their CFO and strategy lead), and I’m very eager to get it done if the (nearly always) absent partner finally wants to sell. But this is new territory for me as I started my company on my own with very little cash. This would require a substantially larger cash investment.

Just wanted to ping this group as I know we have quite a few business owners up in here, see the pros / cons of the route you all went

You have two kidneys for a reason...

 

[MtnElk]

You have two kidneys for a reason...

Hunting with @Dsnow9 requires you to have all your parts functioning, and even then, it might not be enough ha