Tag

subordination

2 insights

Two proportional circles of the buyer's cash at closing on the same $18 million acquisition with the same $3 million seller note. With the note on full standby it is $4.2 million. With the note paying current interest and principal it is $7.2 million, a difference of $3 million.

The Seller Note Counts as Equity, or as Debt. The Terms Decide.

On an $18 million acquisition, the same $3 million seller note moves the buyer's cash at closing from $4.2 million to $7.2 million, depending on whether it is on full standby. SBA rules for the same question changed on October 1.
Financing StrategyBorrower Advisory
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Three small stacked columns funding the same $18 million purchase price, showing buyer equity at close of $9 million on an all-cash deal, $5 million when the seller note pays current interest, and $3 million when the seller note sits on full standby.

Same $18M Price. Three Different Equity Requirements.

Two buyers agree the same $18 million price for the same business. Depending on how the deferred consideration is structured, the cash the buyer needs at close is $9 million, $5 million, or $3 million. The price never changed.
Financing StrategyBorrower Advisory
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