The Situation
An independent auto repair shop in Ohio had been running at $160,000/month in revenue with a solid margin. A competitor across town — roughly the same size, with a customer base that had zero overlap with theirs — was retiring and willing to sell. The combined unit would do $340,000/month with minimal capex overlap and an opportunity to move into the service bay capacity that had been going unfilled.
The purchase price required $1M in financing. The shop was profitable, the combined entity projected to service $4M+ in annual revenue, and the owner had clean financials and strong personal credit. But a bank-required 40% down payment on a business acquisition was outside what the owner had set aside, and the acquisition timeline couldn't accommodate the bank's 90-day underwriting process.
Why the Bank Wasn't Going to Work
Business acquisition financing exists at banks, but the parameters are brutal: 30–40% equity injection from the buyer, 5–7 year terms, and personal guarantees on everything. For a $1M acquisition on a combined entity doing $4M+ in annual revenue, the bank would have required $300K–$400K of the owner's capital as a down payment, plus the personal guarantee on the full amount.
Beyond the equity requirement: 90-day underwriting timelines. The seller had a 60-day exclusivity window before taking other offers public. The bank's process didn't fit the deal timeline.
The deal structure also had a structural complexity the bank didn't handle well — it involved two lenders, one for the real estate component and one for the goodwill/equipment, structured as a single $1M facility with a 36-month balloon after 7 years of amortization.
How We Structured It
The deal was structured as a $1M commercial term loan with a 7-year amortization schedule and a 36-month balloon. Two lenders in the deal — one covering the real estate component, one covering the goodwill and equipment — structured as a single facility with a unified note and payment schedule.
Underwriting key: the combined entity revenue of $340K/month against a $1M debt service created a 3.4x debt service coverage ratio, which was the primary metric for the lenders. The owner put down 15% of the purchase price from personal capital — lower than the bank requirement — but the cash flow coverage and the quality of the underlying assets met the lenders' risk framework.
No personal guarantee required. The equipment and the customer contracts served as the primary collateral package. The 36-month balloon was designed to align with the owner's projection for a refinancing event once the combined entity had 18 months of combined operating history.
Closed in 14 days. The seller had four other inquiries at the time of the owner's offer — all from buyers with bank financing contingencies.
The Outcome
The deal closed in 14 days. The seller accepted this offer over three bank-financed offers that all had financing contingencies and longer close timelines.
- $1M funded in 14 days, two lenders structured as one facility
- 7-year amortization with 36-month balloon
- $340K/month combined revenue (vs. $160K pre-acquisition)
- 71% customer retention from the acquired shop in first 6 months
The combined entity is on track to exceed $4M in annual revenue in year one. The owner is targeting the 18-month mark for a commercial refinance that would remove the balloon and lock in a longer-term rate based on the combined entity's established performance.