The Situation: Business Acquisition With Concentration Concern
Our client sought to buy a business that serves only a few clients. Typically, concerns about revenue dependent largely on only a few clients often prevent this type of deal, but First Business Bank SBA experts were able to accomplish it after detailed research revealed the entire story behind the company’s operations.
- Client Concentration Concern
The vast majority of the business’s revenue is from a few large clients, which naturally increases the risk of losing revenue if relationships are lost.
- Transition Risk
With any business acquisition, there’s a risk that existing clients will leave after ownership transfers. To mitigate this risk, First Business Bank required a seller’s note, ensuring the seller remains responsive after closing.
The Solution: Multi-Million Dollar 7(a) SBA Loan & Express Line of Credit
First Business Bank, an SBA-designated Preferred Lending Partner, worked to secure a seven-figure SBA 7(a) loan, and an SBA Express Line of Credit so our client could buy and operate this business.
- Due Diligence
Through in-depth research, First Business Bank SBA experts analyzed how the business works with its large, publicly traded clients through many points of contact in several divisions and locations.
- Evaluating Experience
The individuals behind the acquisition had in-depth industry experience, including broad profit and loss and balance sheet experience, which also minimized the risk.