And let's also just make another contrast here between self-funded style, SBA style search and independent sponsors. On the one hand, I'll tie in your kind of psychological shift here. On the one hand, as a self-funded searcher, owning 80, 90, as you said, maybe 100% of the business feels like the pinnacle of flexibility because you are the sole owner or almost the sole owner.
Acquiring Minds
From Searcher to Sponsor: How to Buy a $22m Business
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In some sense, that is true. But the way to do that, you know, 99% of self-funded searchers do that is by an extraordinary amount of leverage. 80%, 90% of the deal is with an SBA loan.
And what that does is it makes, it burdens the business with heavy monthly loan payments. So you... So in some sense, you're really, you have a lot less flexibility going into the business as a self-funded searcher if you've taken on a lot of leverage because you're servicing this enormous debt.
So flexibility on paper from the perspective of you being an owner and kind of being able to call all the shots you want and not really having to answer to anybody or live under a mandate. but a severe lack of flexibility in terms of your cash flexibility, which ultimately is what business is about, is capital allocation and resource allocation. So interesting kind of nuance there on the point of…
Other point that I wanted to underline here was, so SBICs, these funds, these SBICs, you hear about constantly in independent sponsor land. You hear about them never in search land. And as you said, they are kind of SBA-associated pools of debt capital, but also...
Many of them do also do equity. So they're different than your traditional lender because traditional lenders, SBA lenders, for example, only care about protecting downside. They really don't care about anything else.
Sure, they'd love to see your business succeed, but only to the extent that that means that they're likely to get their money back. And SBIC has upside. They have some equity as well.
They're a bit of a hybrid. They're mostly debt. So in your case, the check from Oxford was 80% debt, 20% equity.
But that 20% equity means that there's alignment on both sides. They're really incentivized to see you grow as well because they benefit directly from that. Does Oxford have a seat on the board?
They do, yes. How does that play out? So they, Oxford and Everside both have a seat on the board. The way that the board, we have five people on our board.
They each have one board seat and then an observer seat. And we meet quarterly for the board meetings. We do monthly financial reviews.
But the way that plays out is they'll sit on the board. We'll review our strategic direction, how the company is performing. And then we have myself on the board.
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