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.
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.
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.
The individuals behind the acquisition had in-depth industry experience, including broad profit and loss and balance sheet experience, which also minimized the risk.
"On paper, this acquisition presented challenges that typically are difficult to surmount, however, digging into the specifics beyond the surface allowed us to UNDERSTAND HOW THE CLIENT TRULY OPERATES TO REVEAL THE ENTIRE STORY so we could move forward with the deal.”
— Ryan Black, SBA Business Development Officer, First Business Bank