Here’s a condensed version under 1,700 characters:

SBA Financing for Partial Acquisitions

This post explores using SBA 7(a) loans to acquire 88% of a company, with the seller retaining a minority stake. Bruce Marks states, "So there you have it, a stock sale for the purchase of 88% of an existing business, funded by an SBA Loan," demonstrating its feasibility.

Synergistic Acquisition

The deal aims to create a stronger combined business through:

• Operational Synergies: Cost savings and process efficiencies
• Strategic Synergies: Market expansion and competitive positioning
• Financial Synergies: Improved profitability and cash flow

Deal Structure & Seller Financing

• Equity Injection: $1,100,000
• Seller Notes: $4,000,000 (39% of the deal) – critical to making the deal work
• SBA Loan: $5,000,000 + $700,000 Pari Passu Loan

Contingent Seller Notes vs. Earn-outs

"SBA does NOT allow for 'earn-outs' but does allow for 'Contingent' Seller Notes," ensuring compliance.

Valuation & Sale 

The buyer paid 6x EBITDA ($2M avg. past 3 years)—a standard multiple in the insurance industry. While this was a stock sale, Neal Patel notes that asset sales can also facilitate equity rollovers.

Personal Guarantees & Equity Concerns

• No PG required if seller owns <20% post-close (Patel)
• The seller’s 12% stake (~$1.5M value) vs. buyer’s 88% ($1.1M) often causes deal friction (Adhikari)

Conclusion

This case study illustrates SBA-backed acquisitions with seller equity rollovers, highlighting structuring strategies, compliance considerations, and financial implications.

Read that full post here: https://www.linkedin.com/posts/bruce-marks-mba-cmaa-7938b67_wssbruce-im-looking-to-acquire-88-of-activity-7282422490096660481-QTrR?utm_source=share&utm_medium=member_desktop&rcm=ACoAAAB93fwBBqpG4EyWpoMTT0FThJ1EDPH5rg8

DISCLAIMER: The BizNexus Roundup podcast features AI hosts whose analysis is based entirely on pattern recognition and reports created by actual human experts. While our hosts can process vast amounts of data, they've never actually closed a deal or sat in a boardroom.

Our discussions draw from publicly available sources and expert insights, but we strongly encourage listeners to consult the original documents and reports referenced in each episode for the complete context and analysis. The AI hosts' market predictions and deal assessments, while data-driven, are no substitute for professional human judgment and due diligence.

For actual M&A advice, please consult qualified human experts and always go to the source materials to get the full story.

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