Investment Percentage Required to get Finance?

[robm3]

Hello all,

Want to get some feedback on what commercial banks will loan on a business purchase. All figures in US$

T/O $15m
Ebitda $4m

Purchase price $22m (5.5 multiple - cheap for this type of business).

Property $1.5m, various assets and SAV $2m (inc in $22m price).

We have circa $8m and can get more from Investors but want to get a feel for where banking finance will kick in.

Should just point out it's only early days and naturally will be meeting with banking types in the near future My feeling is up to 60% is possible but want to know what the PH Hive-Mind thinks is reasonable.

[johnfm]

Depends on the sector that the business is in for some lenders, no?

[foliedouce]

lots of variables here

Depends on sector and whether you can use stock / property as security, and also potentially leveraging the debtor book.

Finger in the air, you should be able to get 2-3 x EBITDA as senior debt so assuming that there is no current debt then that's 8-12 million. In fairness the 3 x would probably only be possible with a PE investor at the table as well, the banks seem to take comfort in that.

[robm3]

2-3 looks about right.

We've just had our first round of talks with Lenders. 3 gets the deal over the line so looking extremely positive at the moment.

It's a strong market sector with excellent growth potential.