Financing a micro-lbo
I've been reading Predator's Ball. Most of the heavy hitters (Icahn, Perelman, Peltz, etc.) started with really really small acquisitions.
If you were going to buy a company with say 25 million revenue, 1.25 million ebitda, at a 6x multiple for 7.5 million, and only cash in the low hundred thousands, how would you finance it?
This has to be possible. There is someone out there, probably not on this board, that knows how to finance something like this.
My thoughts are:
Seller's note: 2.5mm
Bank note: 1mm
Equity: 500k
Where does the rest come from?
That's a little small even for micro-LBO's I would think. Really something like that could just primarily be driven by bank paper couldn't it?
there are plenty of small pe shops/hard money shops out there that would fund a deal like this if the economics made sense. you would probably be paying pretty high rates and likely giving up some pretty decent warrant coverage too; however, something like this is very doable if you know the right people.
How high of rates?
i'm sure it depended on the deal, the group and the company. maybe 14-20.
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