Capital Raise for SMB Roll Up

Based on the most helpful WSO content, your roll-up strategy for doors and windows installers aligns with common approaches in SMB roll-ups. Here are some key considerations and insights:

1. Leverage and Financing:

   • As seen in similar strategies, leveraging up to 3x Debt/EBITDA is often feasible, especially if you're acquiring at low multiples (sub 4x). Banks may not require equity as long as Net Debt/EBITDA and DSCR ratios are respected.
   • Incremental debt options can also be utilized for add-ons, provided the post-close leverage meets thresholds (e.g., 4x leverage on a combined EBITDA).

2. Equity Raise:

   • For additional equity, consider co-investors or LPs who are familiar with roll-up strategies. Pension funds or strategic investors might be interested in participating, as seen in other roll-up cases.

3. Execution Strategy:

   • Ensure management teams in the acquired businesses are incentivized, possibly through equity rollovers or earnouts, to maintain alignment and drive growth.
   • Focus on operational synergies and margin improvements, as even a 10% margin lift paired with multiple expansion can significantly enhance returns.

4. Exit Planning:

   • Targeting an 8mm EBITDA exit is ambitious but achievable with disciplined execution. Buyers will likely value the platform higher if you demonstrate scalability and operational efficiency.

If you're looking to connect with others in the space, forums like WSO are a great place to network. You can also explore private equity professionals or family offices specializing in SMB roll-ups. For more detailed advice, consider reaching out to users on WSO who have shared similar experiences, such as in the "Healthcare Rollup Strategy" or "Keeping Management Motivated Post-Exit" threads.

For further insights, you can explore this thread: https://www.wallstreetoasis.com/forum/private-equity/keeping-management…</a">Keeping Management Motivated Post-Exit.

Sources: Healthcare Rollup Strategy, Roll-up acquisition PE questions, SaaS LBO, Keeping Management Motivated Post-Exit, Keeping Management Motivated Post-Exit