Industrial Equipment Supplier
Pioneer Capital Advisory LLC has recently helped a midcareer professional with securing financing to close on the acquisition of an industrial equipment supplier business located in the Southeast. The buyer/sponsor of the deal approached Pioneer Capital Advisory LLC after identifying an acquisition opportunity that was compatible with the buyer’s professional experience and transferrable management skills.
The company that was acquired had recently been sold in the prior two years, but the owner of the business was trying to manage it as an absentee owner, which was not working for the business to perform at the level that it needed to. Pioneer Capital Advisory LLC was able to move quickly and efficiently for the buyer/client, identifying a top SBA lender at a local regional bank, that was able to provide the buyer/client with both an SBA 7(a) term loan to use for the business acquisition and also an SBA Express Line of Credit, to utilize for revolving working capital.
The buyer obtained an SBA 7(a) loan debt facility for ~ $1.8 Million for the acquisition of the company, and also obtained an SBA Express Line of Credit for $200,000 to provide revolving working capital to the business. Pioneer Capital Advisory LLC was able to find a lender that was comfortable with flexibility around the buyer’s down payment, and the lender that ended up closing on the acquisition financing allowed a seller’s note on full standby for the duration of the SBA loan to count towards the down payment. The buyer ended up contributing only 6.81% of the total deal value as buyer cash, and the difference to get to the total required equity injection came from a seller note on full standby for 10 years (the term of the SBA 7(a) loan). Pioneer Capital Advisory LLC was also able to help the buyer with obtaining a very competitive interest rate on the SBA 7(a) acquisition loan of Prime + 1.00% fixed for 5 years, then readjusting for the last 5 years of the loan term at Prime + 1.00% fixed.
If you or someone that you know is pursuing a business acquisition, and if you are either under LOI or are pre-LOI on the opportunity, and are looking for guidance with navigating the business acquisition financing process, please feel welcome to reach out to Matthias Smith with Pioneer Capital Advisory LLC via email at matthias@pioneercap.com.