Revolutionizing $5-15 Million Deals With Pari-Passu Financing

No One Else Is Doing Pari-Passu Financing Quite Like Us

Here at Ivanhoe Capital Advisors, we started to look at the landscape of the M&A world and saw a very big gap when it came to deals in the $5-15 million range. They were sometimes too small for venture capital groups and at times too large for banks who want to only utilize the SBA guarantee for blue sky.

The problem with this is that every person’s SBA eligibility is only $5 million! This leaves a huge gap when we have a business selling for $10 million. How do we overcome this and give a buyer an option that can really be feasible? No one wants to deplete all their cash and sellers always think the word “Note” is a four-letter dirty word!

There must be a better solution, and pari-passu may be it.

What we have structured is a pari passu loan in which we can take advantage of the SBA 7a program for the first $5 million (or whatever the borrower’s current eligibility is). Then, we can use a conventional piece from our bank for the remainder. We will try to do this with as little cash infusion from the buyer and/or seller note as we can. We do not need real estate. We can do this with blue sky as well.

Also, all our scenarios will have a working capital component to them. The first 14 months are crucial in any acquisition and we want to make sure the buyer is well-capitalized for anything that might come up.

Here are just some of the pari-passu pre-qualifications we have done within the last 30 days and we can do the same for your possible listings:

Independent Home Care Company

• Total Project: $8,590,000 which includes $300K in working capital
• Buyer Cash Injection: $1,365,302 (just under 16%)
• First note (SBA): Maxing out $5 million SBA eligibility
• Pari-Passu Conventional Bank Note: $2,562,197

Firearms Company

• Total Project: $10,495,000 which includes $300K in working capital
• Buyer Cash Injection: $2,153,000 (just a little over 20%)
• Seller Note: $750,000 (just a little over 7%)
• First Note (SBA): Maxing out $5 million SBA eligibility
• Pari-Passu Conventional Bank Note: $2,592,000

Industrial Supply Company

• Total Project: $6,268,750 which includes $350K in working capital
• Buyer Cash Injection: $1,046,850 (just a little over 16%)
• Seller Note: $800,000 (just a little over 12%)
• First Note (SBA): $1.2 Million (buyer only has this left in SBA eligibility)
• Pari-Passu Conventional Bank Note: $3,221,900

Door & Window Company

• Total Project: 6,380,000 which includes $250K in working capital
• Buyer Cash Injection: $1,051,000 (just a little over 16%)
• First Note (SBA): Maxing out $5 million SBA eligibility
• Pari-Passu Conventional Bank Note: $579,000

Trucking Company

• Total Project: 10,200,000 which includes $500K in working capital
• Buyer Cash Injection: $2,314,000 (just a little over 22%)
• First Note (SBA): Maxing out $5 million SBA eligibility
• Pari-Passu Conventional Bank Note: $4,075,900

Fitness Business

• Total Project: $6,820,000 which includes $150K in working capital
• Buyer Cash Injection: $749,500 (just a little over 10%)
• First Note (SBA): Maxing out $5 million SBA eligibility
• Pari-Passu Conventional Bank Note: $1,025,500

Retail Big-Box

• Total Project: $12,695,000 which includes $500K in working capital
• Buyer Cash Injection: $2,559,113 (just a little over 20%)
• Seller Note: $2,000,000 (just a little over 15%)
• First Note (SBA): Maxing out $5 million SBA eligibility
• Pari-Passu Conventional Bank Note: $3,153,887

Landscaping Business

• Total Project: $9,067,000 which includes $400K in working capital
• Buyer Cash Injection: $1,801,638 (just a little over 19%)
• First Note (SBA): Maxing out $5 million SBA eligibility
• Pari-Passu Conventional Bank Note: $2,730,412

Industrial Supply Company

• Total Project: $6,268,750 which includes $350K in working capital
• Buyer Cash Injection: $1,046,850 (just a little over 16%)
• Seller Note: $800,000 (just a little over 12%)
• First Note (SBA): $1.2 million (buyer only has this left in SBA eligibility)
• Pari-Passu Conventional Bank Note: $3,221,900