WSS: This past week, unfortunately another transaction for $7,500,000 fell apart after issuing a commitment letter.

One can say "this is just part of the business"

Although that is true, it still stings for all those involved

so let's discuss here 👇 So after being thrilled for my client on Friday afternoon, after approval of his loan request at Executive Loan Committee, we issued the commitment letter and sent it to our prospective borrower.

All parties were notified and everyone was elated.

War Story Saturday (WSS): Bruce, I want to submit an LOI. I know it's just over a 5X Multiple, but can we see if the deal pencils.

It seems like Sellers are not willing to budge and with lower interest rates expected, perhaps it makes sense.

Here's what I'm seeing 🤔 It's interesting having conversations with so many Searchers right now. It seems like in order to get a deal across the finish line it will take a lot of negotiations and willingness to do the deal by all parties.

I know I am a small sample, but this is my perspective.

WSS (War Story Saturday):
Bruce, I have an executed LOI based on an LTM as of the end of August showing $1,496,000 in EBITDA

I'm interested to see what you can lend on this business

The Seller is 80+ so holding a 10 year note is not possible

Read this deep dive and mind set👇 So with that info, the Searcher and I exchanged e-mails and we set up a video call to walk through his executed LOI, model and potential deal structure.

The first place to start was the purchase price and the agreed upon multiple being paid. What would you offer here?

WSS: A few months back, I met with a gentleman who wanted to purchase a small business. It truly defined the word "small".

He explained that the business would not qualify for an type of financing as the Seller's Tax Returns showed very little profit

What now? So he asked, Bruce, do you have any strategies that could possibly help?

I said I did, so I thought I would share.

Not every deal is big and not every deal will qualify for traditional bank financing.

WSS: Bruce, I am currently under LOI to buy a business that did $535,000 in EBITDA in 2022 and $978,000 in 2023.

How does your bank look at this? Can we model this deal to see if it pencils?

What should I be looking for?

Well, read here 👇 If you are an active Searcher, you have seen this time and time again. Issues like COVID, supply chain, the economy etc. certainly were contributing factors in 2022. In 2023 the business has "rebounded" back to normal levels from pre-those other issues.

I know you want to submit an LOI.

You know I preach about working capital being included

So, I thought I would share some general thoughts around that subject.

So, please ask/consider this: If you only have a CIM, and the broker will not share tax returns or financials just yet, ask for at least a year ending Balance Sheet. They can redact the name/company info to protect the Seller. That's fine but try to get it.

WSS: Bruce, I want to submit an LOI

Ok, so you have done a deep dive on the company, have their last 3 years tax returns and of course at least 12 months of financial statements so you can see what the working capital needs of the business are, correct?

Well 🙄 On average, I have about 10 new Searcher calls a week. Many of them start with the line, I have a company I am interested in and expect to submit an LOI this week.

I want to go over the deal with you to make sure it pencils.

WSS: Bruce, I have an LOI executed for $4,900,000 and need your help. I was going to reach out earlier but I got blindsided by the rate from another Lender.

Now I am in jeopardy of losing my deal because they could not deliver in time.

Can you help? So this Searcher reached out to me on 12/11/2023 somewhat frantic because the Lender he had been working with hadn't even supplied a Term Sheet after 2 months.

He informed me he was referred to this Lender by a referral partner and the rate was below Prime and fixed.

WSS: The first Letter in SBA stands for Small. When I made my very first SBA Loan years ago, the maximum loan amount was $500,000. Today it is $5,000,000.

When I look at my 3 most recent transactions, the purchase price of each has exceeded $12,000,000.

Are these small? So in this post, I want to share with you how to get a deal this size done. As I always tell me potential clients, when you have a willing seller, a willing buyer and a willing lender, then we can structure a deal to make it work!

WSS: I have an executed LOI for $2,500,000. I am speaking with a few Lenders BUT have several requirements to get this deal over the goal line.

These are:

I want to invest only 2.5%
I need to close in 60 days
Working capital will exceed my equity injection

Interested ? I was introduced to a Searcher while visiting out of town. When we sat down, we exchanged pleasantries and then got right down to business. He was quick to mention that he had already spoken with 2 other Lenders and was expecting Term Sheets from both. I then asked him this:

WSS: Bruce, I'm a searcher looking to buy a business. I don't have that much in the form of assets and I don't have much capital to invest

I heard I may not be able to get SBA financing as a result because my PFS is weak

Is that true?

Here's the 5 most asked questions I get 🔹 Question #1 - How relevant is the strength of my Personal Financial Statement (PFS) when it comes to SBA Financing?

As most of you know who have been following me, I am always the first to tell you, each bank looks at things differently and each bank interprets

New WSS: My partner and I submitted an IOI on a business we had interest in buying.

As a result, our broker and selling broker set up a meeting with the seller.

It was our chance to "walk the business" and meet with the seller in person.

Curious how it went?

Well read here! So we submitted this IOI for $3,600,000 on a somewhat interesting business. Everyone knows in this space you have to get many "at bats" to perfect your skill.

It gets easier the more you do it.

So we set up this meeting for after hours because the "employees" don't know

WSS: Bruce, Can we talk about the elements of an LOI and some of the language that is included?

I want to better understand exactly what needs to be in there so it is a meaningful LOI.

Can you provide a draft for me as well?

Ok, let’s dive in 🤿 I just spent the last three days at @Sam_Rosati Searchfund Bootcamp and the big take away was working capital and the negotiated amount inside an LOI.

As a result, I thought I would breakdown a few elements of the LOI and why working capital is such an important number.

WSS: Here's how to turn $30,000 to over $3,250,000 in 10 years. This is from a deal we recently closed.

As a result, I wanted to share with those just how much wealth can be created my purchasing a successful small business.

Obviously, this is why "search" is so popular! Why is "Search" the key word now and Colleges and Universities teaching this through ETA (Entrepreneurship Through Acquisition)

Simply put, it's the best way for folks to create wealth.

Yes, it takes all of what can be said on this platform. It takes everything you can say!

WSS: I lost a $7,850,000 Pari Passu deal in closing after spending 6 months to get it there.

This was an acquisition of a well established existing franchise.

I thought I would share why and share some important factors to consider when looking to buy a franchise concept. So these buyers reached out to me. I knew one of the principals very well. This was right at the beginning of this year. They were in negotiations to purchase an existing franchise (no, I cannot disclose it by name but it had nothing to do with food or entertainment)

WSS: Bruce, I need your help in structuring this acquisition transaction.

I would like to submit an LOI for $2,250,000

I want to also own 100% and do not want to bring in outside investors and dilute my ownership

But, I don't have much liquid cash to invest

Any ideas? So this Searcher set up a Teams Video call to discuss a business he wished to purchase. He planned on submitting an LOI for $2,250,000.

This did not include the full working capital needed to properly operate the business, nor deal fees.

We then had to account for this.

WSS: I just signed an LOI for $7,000,000 for a great company in a great industry

I have very little money of my own but have investors that will back me

I am under 30 but believe that I am the right operator and want to know if you will lend me the money to buy this business? So this Searcher requested a Teams Video call with me to talk about an acquisition he just got under contract. The purchase price was $7,000,000 and he knew he would need a Pari Passu Strip to complete the transaction.

The transaction required $500,000 in working capital.

WSS: Bruce, I have received your banks commitment letter for my $4,100,000 acquisition transaction.

Can you set the expectations around timing and what is needed to get this deal to the closing table?

Of course!

Here's what you need to know about closing an SBA Loan: So this Searcher reached out and asked if I could do his deal. Quick answer was yes and that's exactly what will happen!

Folks always ask, "what does your process look like?"

Here is my response:

Once I receive your "complete" loan request package, with everything I need:

WSS: Bruce, I want to submit an LOI for $5,000,000 on this business

Can I review this deal with you to see if this is something your bank might finance?

Of course you can.

BUT, tell me what you are basing this on and... So this Searcher sent me an e-mail requesting a video call to discuss a deal he was very interested in.

He sent me his "teaser", his resume and a PFS

We exchanged introductions and then got into the deal dynamics.

He really liked the business and wanted to submit an LOI.

WSS: Bruce, I have already worked out the terms and conditions on this $4,200,000 acquisition of a Web Design and SEO Agency

One of the conditions is a 3-year Non Compete Clause

I'm fine with this, but wanted to make sure the Bank was as well

What say you SMBTwitter ? So these 2 business partners called me to discuss their pending transaction. I remember being in Las Vegas sitting in the conference section of Caesars Palace at the Multi-Franchise Show.

The partners told me they had a pretty complete package and that the SPA was also drafted.

WSS: Bruce, I have executed an LOI to purchase a business for $6,400,000

I believe I’m the right buyer BUT my personal net worth is less than $100,000

Can I get an SBA loan to acquire this business?

So, what do you think ? So this Searcher was referred to me and he reached out to discuss his pending transaction. He was starting his due diligence on a telecommunications company that he wished to purchase.

He explained that he was a self-funded Searcher and that he would be raising equity.