M&A Financing Presentation
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The document discusses financing options for the sale of financial advisory practices through Skyview Center. It outlines the advantages of bank financing for sellers and buyers, including increased liquidity at closing and longer loan terms. It then describes different financing structures like seller's notes, conventional loans, and SBA loans. The document provides examples of financed transactions including a tranche sale, partial sale, and ESOP succession. It emphasizes the importance of banking relationships, seller notes, buyer equity, and contractual flexibility in closing deals with bank deposits.
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M&A Financing Presentation
- 1. SKYVIEW CENTER | 294 Grove Lane East | Suite 120 | Wayzata, MN 55391 PRESENTED BY: SCOTT WETZEL, JD Managing Partner AARON HASLER Managing Partner M&A FINANCING
- 2. How important is it to you, when considering retirement, that your prospective buyer has access to cash-at-closing financing for a considerable percentage of the purchase price? How important is it for your buyout partners to be able to access financing in order to implement the deal? When evaluating prospective buyers for your practice, which would you prefer? ? ? ? SKYVIEW CENTER | 294 Grove Lane East | Suite 120 | Wayzata, MN 55391
- 4. SKYVIEW CENTER | 294 Grove Lane East | Suite 120 | Wayzata, MN 55391 4 Correspondent Lending Platform Conventional & SBA Correspondent lender providing timely and cost effective bank financing to independent and registered financial advisors to promote the preservation of small business ownership in the financial services industry.
- 6. Advantages of Bank Financing Seller Advantages • Increased liquidity at closing • 70% - 80% payable at close • Escrow 20% - 30% payable over one to three year period • Decreased risk 6 Buyer Advantages • Deal consummation • Longer loan terms • Reduced monthly payments • Borrowing scale SKYVIEW CENTER | 294 Grove Lane East | Suite 120 | Wayzata, MN 55391
- 7. Financing Structure Summary Seller’s Note • 4-5 year terms fully amortizing • Fixed rates • No lien on residence • Flexible conditions SKYVIEW CENTER | 294 Grove Lane East | Suite 120 | Wayzata, MN 55391 7 Conventional • $1MM minimums • 7 year terms • 10 year amortization • Fixed rates • No lien on residence • Efficient • 27 documents to close • 30 – 45 days to close SBA • $350k minimums • 10 year terms • 10 year amortization • Floating rates • Fixed option • Lien placed on residence • Cumbersome • 151 documents to close • 3 – 6 months to close
- 9. Sale Structural Options Tanche Sale Multiple liquidity events over a predetermined time line. • 3 – 10 years 9 Partial Sale Senior partial sale of less than 100% of the practice. • Subsequent purchases not always set Complete Sale Sale of 100% of the practice. • Senior advisor • Junior advisor • “tuck-in” SKYVIEW CENTER | 294 Grove Lane East | Suite 120 | Wayzata, MN 55391
- 10. Structural Financing Eligibility Seller’s Note • Tranche sales • Partial sales • Complete sales • Senior • Junior “tuck-in” SBA • Complete sale only • Seller must depart the practice entirely within 12 months SKYVIEW CENTER | 294 Grove Lane East | Suite 120 | Wayzata, MN 55391 10 Conventional • Tranche sales • Partial sales • Complete sales • Senior • Junior “tuck-in”
- 11. CASE STUDIES: Funded Loans Tranche Sale • $4.2MM valuation • Internal buyers • 25% buyout annually over a 5 year schedule • Deposits Partial Sale • Valuation $6.8MM • Internal buyers • Sole owner sold 48% • Two junior partners • 24% each • $3.4MM bank financing • Deposits 11 ESOP Succession • $17MM valuation • ESOP • $5MM seller note • $5MM refinance • $7MM cash to seller at close • Deposits SKYVIEW CENTER | 294 Grove Lane East | Suite 120 | Wayzata, MN 55391
- 12. Optimal Deal Structure 95%BANK FINANCING SKYVIEW CENTER | 294 Grove Lane East | Suite 120 | Wayzata, MN 55391
- 13. Keys to Close Deposits • “Banking relationship” with borrower • Operating account • Seller proceeds Seller Note(s) Buyer Equity • “Skin in the game” – 5% to 10% Contractual/Structural Creativity 13 SKYVIEW CENTER | 294 Grove Lane East | Suite 120 | Wayzata, MN 55391
- 14. Mitigating Factors • Loan Amount • Character (credit) • Cash Flow • Loan devalue SkyView’s Standard Loan Structure* * This above constitutes a proposal and is not a commitment to lend. The fee, rate, terms, and conditions are for informational purposes only and will require formal credit underwriting and approval. SKYVIEW CENTER | 294 Grove Lane East | Suite 120 | Wayzata, MN 55391
- 15. SKYVIEW CENTER | 294 Grove Lane East | Suite 120 | Wayzata, MN 55391 15 NEXT STEPS: Pre-Qualification
- 16. SKYVIEW CENTER | 294 Grove Lane East | Suite 120 | Wayzata, MN 55391 16 (866) 567-6282 Q&A