Financing an Acquisition – What Buyers and Sellers Need To Know

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About the Episode

This comprehensive show on acquisition financing looks at what buyers and sellers need to know from the beginning. Stephen Speer shares his experience as a finance intermediary to discuss the questions lenders ask, what they look for before making an investment in a company, working with PE firms, family offices, SBA loans, and other capital providers, valuations; EBITDA multiples; how equity is used in an acquisition, and why a seller needs to understand how a buyer will finance the purchase of their business.

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“Time kills deals. On the finance side, I think the biggest thing that I tell any buyer listening to this podcast is that it’s absolutely imperative that you have a capital provider review the business and review you (as the buyer) prior to making an offer. You could have the best letter of intent on the face of the planet, but if it doesn’t mirror the available financing, then it’s all for naught.”

Stephen Speer

In this Episode

4:46 What are the different types of loans available for financing an acquisition?
5:47 What components of a deal structure are typically found in a bank-financed transaction?
9:56 Why should a seller understand how deals are financed?
12:30 What steps should sellers take to ensure their financial records are in good shape if they plan to sell their business within one to two years?
17:22 What are the key differences between SBA loans and non-SBA loans?
21:32 How challenging is the process of obtaining an SBA loan?
24:23 What is the typical deal structure for a $7 million to $20 million loan? What are banks looking for in a buyer in larger deals?
29:03 How is equity used as a component of an acquisition?
32:10 What is a capital provider?
35:39 How do PE firms differ from family offices in the acquisitions they pursue?
38:32 What do buyers need to know about working with PE firms to raise debt capital? How long is the process, and how many pitches does it take to get a deal done?
45:33 Regarding valuations, are there guidelines for lenders regarding EBITDA and multiples?
47:06 What are the most important criteria that capital providers are looking for? How important is having upward-trending revenue, strong margins, and a strong management team?
48:53 What are some deal killers for lenders?
51:14 What are some of buyers’ and sellers’ biggest mistakes in getting financing?
55:08 What must a buyer know about working with a loan intermediary such as eCommerce Lending?

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Resources Mentioned in This Episode

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Acronyms or Terms Used in This Episode

  • SBA: Small Business Association 
  • SOP: standard operating procedures

Meet Our Guest

Stephen Speer

Stephen Speer

Founder and CEO of Ecommerce Lending

Stephen Speer is the Founder and CEO of Ecommerce Lending, a firm specializing in financing acquisitions, acquisition advisory, and search services in the online space. With a decades-long lending career, Stephen and his team have utilized their expertise to assist hundreds of entrepreneurs in achieving business acquisition success. As an e-commerce leader, guest speaker, and M&A instructor, he and his firm have funded over 500 transactions totaling over $1 billion, making them the top lender in the country in this very specialized niche.

He was recently featured in Acquisition Aficionado Magazine.

Location Location: Palm Harbor, Florida

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