Acquiring Isn't Always a One-Way Door

So 80% SBA loan loan 7 a 10 my cash injection and then the other 10% it was a seller note that was on standby until the SBA loan was paid off. Right. So not a current interest, just on standby until the SV loan was satisfied. So that was just the, the structure of the business. 80, 10, 10 which is, which is pretty typical.

The, although the full standby where the seller's not going to get any of their financing payment until after the SBA loan is paid down, you know, which, which if you don't Prepay, that'll be 10 years. That seems like a bit of an unusual feature. How did you land on that?

You know, how do you call that term? You know that, you know, the business makes X amount of EBITDA and then you have to have that multiple to satisfy the loan requirements. Right.

The dscr.

Dscr. Because there was no assets on the business, we had to hire very high dscr. So it essentially, you know, forced us to either have those terms as they were or, or just find another bank. So the previous owners, they just wanted to sell it.

They were not very excited at spending more time on the business. So at that point they, they were able to just agree to, to. To anything just to, to.

To. To sell the business for that amount. So that's really what led to that.

And you must have had negotiating leverage in the sense that the revenue was declining. Now it's a cyclical business and so there's going to be ebbs and flows. But usually sellers try to sell the business after a particularly strong year.

They were selling the business at a particularly weak moment in the business's life. So that gives you a lot of leverage, does it not?

That's a great question. So I think I was probably not naive, but obviously was my first time buying a company and since I did not do a two year period where I just searched for businesses and submitted Lois and went through negotiations, I wish I had more content, more experience for to your point, I wish I negotiated even more.

The previous owners were not very transparent with me on the month to month profit and loss statements during 2023 because we started actually talking at the end of the summer in 2023. That's when I had assigned LOI so I had exclusivity to buy that business. And my obtaining funding was what delayed me the most.