From 16 Years in Corporate to a $1m SDE Acquisition

which are about upside. So forgivability is about protecting downside for you, the buyer. If the earn outs are about incentivizing upside to the seller.

That is not allowed in an SBA context. So we actually hear about earn outs very little for SBA deals down here in the States. But of course, they are a very common structure in acquisitions broadly outside of an SBA context, private equity, whatever, conventional financing, whatever.

So great. So you had both downside protection for you and upside incentive for him. The term in Canada is not seller note, but it's, what is it, like vendor holdback or vendor? Vendor take back. Vendor take back. Okay. So I'm Americanizing the language.

Forgive me for that. But it's a vendor take back. Great. And then so 60%. So going back now to getting a deal financed in Canada, 60%.

So that's not as generous. I don't know if that's the right word. That's not as generous as the 80% to 90% you can get with the SBA here in the States.

But 60% is substantial. Yeah.

Yeah. Yeah. It was substantial. Um, and we went through the process of getting term sheets on, um, you know, a number of, from a number of different banks, um, and it varied in terms of what they could offer. Uh, but the reality is because there were some, uh, hairy aspects such as the client concentration, this very niche, um, industry we're in the.

heavy reliance on labor and the fact that it's in all these different jurisdictions and me not being in the industry beforehand, there were questions from the bank that had to be answered where the advisor that I mentioned helped a lot with. And this I think got to a point where we were comfortable both qualitatively and quantitatively 60%, I think, was what I was expecting with this particular…

But I think if it was a different one where it didn't have as big of an earn-out component or a forgivable seller note component, it could have been a bit higher as well. There was opportunities for that for other deals that we reviewed.

Up to, like, what, 70%?

Yeah, I think up to 70 would be the conservative. It may have been possible to be even a little bit higher than that. Bookkeeping one was very, I mean, it ticked boxes for everyone. So that included the bank.