SMB & ETA Acquisition Lender | Author | Closed $560 Million in 10+yrs| SBA loans from $2.5 - $10.0 million | tweeting real SBA stories | War Story Saturday 🪖
Joined April 2022
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Bruce Marks, MBA, CM&AA retweeted
One of the most common gaps I saw on the sell side. The fix starts before the CIM: walk the owner through which add-backs a lender and a QoE will actually accept, line by line. Expectations are much easier to reset in month one than at LOI.
Bruce Marks, MBA, CM&AA retweeted
Thanks, Bruce. Realistic expectations on both sides is what gets deals to the closing table. Grateful for the work you do with first-time buyers.
Bruce Marks, MBA, CM&AA retweeted
This week on SMBX:
1. SBA lender navigates $7 million acquisition with obstacles galore…SBA debt, seller financing, licensing hurdles, and more @sbabmarks
2. Profit’s always priority when it comes to sustainable employee pay and benefits @jamesonhaslam
3. How to stress test revenue, margins, collections, customer loss, and debt service before closing @withkumo_
4. Some SMBs need basic, boring improvements before growth can get interesting @SMB_RealEstate
5. A profitable small business isn't necessarily worth what you think when it's time to sell @DBarnettMoncton @robertplank
kumo.substack.com/p/take-fiv…
Bruce Marks, MBA, CM&AA retweeted
This is great and much needed flexibility, especially for the borrower's sake. Thanks for spreading the word!
Bruce Marks, MBA, CM&AA retweeted
Rate is effectively irrelevant to the outcome of an SBA deal. Certainty to close, of which speed is one factor, is extremely relevant. Which is why I have a FBOL term loan
At a 9% interest rate, annual debt service is 15.2% of enterprise value. At an 8.75% rate, it's 15.0%. So if you have a $3mm loan on a $1mm EBITDA business, you're paying $5k more per year in debt service with the higher rate. Amazing to me that anyone would even consider this when picking a bank
Bruce Marks, MBA, CM&AA retweeted
This week on SMBX:
1. Operating businesses makes you see acquisition opportunities and inflection points investors often miss @scottfelsenthal
2. Seller references could mean the difference between another pitch and an executed LOI @Elialbrecht
3. “Cultural vs. Operational Due Diligence: Key Differences” @withkumo_
4. Non-standby seller debt counts toward DSCR @sbabmarks
5. Larger SBA acquisitions will need QoE work earlier in the process now - from Pease Bell
kumo.substack.com/p/take-fiv…
Bruce Marks, MBA, CM&AA retweeted
I speak to several searchers a week. If you are comfortable, submitting an offer on the sellers one year of best cash flow and paying a high multiple for it, perhaps you should rethink that strategy.
You can always convince yourself that you are getting a really good deal. I am the sounding board that will perhaps tell you differently.
Bruce Marks, MBA, CM&AA retweeted
credit to @sbabmarks for the "War Story Saturday" framework which he originally created
Bruce Marks, MBA, CM&AA retweeted
I’ve had three deals fall through because the seller would not budge on that perspective.
It’s akin to the real estate seller who sells their commercial property on pro forma projections instead of actuals.
“If it’s so easy, why didn’t you do it?”
Bruce Marks, MBA, CM&AA retweeted
Search isn't hard because good businesses don't exist.
It's hard because finding one requires hundreds of "no's" and the discipline to wait for the right "yes."
Bruce Marks, MBA, CM&AA retweeted
Thanks Bruce. I appreciate that. I hope I can save searchers a bit of time and frustration with this OS.
Bruce Marks, MBA, CM&AA retweeted
Two hidden ways buyers overpay, and the framework to avoid both, courtesy of @Sam_Rosati and @sbabmarks on today's webinar on Net Working Capital.
Many first-time buyers overpay in two hidden ways, both of which we covered on today's webinar with @sbabmarks on Net Working Capital.
(1) Agreeing to or giving credit for an addback. You're not paying $15K for the addback. You're paying a multiple of $15K. At 4x, that one decision just cost you $60K.
(2) Conceding that the business doesn't need to come with WC. You pay a market multiple AND compensate the seller separately for receivables. You just paid twice for the same asset.
Bruce's framework: "Need determines amount"
The business needs working capital to run. Either it comes with the deal, or you fund it yourself. There is no third option.