Acquisition financing for searchers who think like operators.
You’ve spent months sourcing. You found the target. Now you need a capital partner who has actually underwritten a business they were about to own — not just one they were about to lend to. I’ve been on that side of the table. I know what gets missed when the structure doesn’t fit the deal.
Apply to Caliber Intake takes under 5 minutes — no pitch deck requiredThe gap in acquisition financing
Most acquisition lenders price the loan. They don’t price the deal.
You’ve underwritten the target. You modeled the SDE add-backs, stress-tested customer concentration, and pressure-tested the seller’s transition plan. You know what you’re buying.
Then you walk into a lender’s office and they look at three things: debt service coverage ratio, the SBA’s eligibility worksheet, and whether your collateral package satisfies their credit committee. They will price you a loan. They will not price you a deal.
That gap costs searchers in three specific ways.
Working capital under-funded. Most lenders structure the senior debt against the purchase price and forget the post-close reality. You need 60–90 days of operating cash flow to absorb the transition. The lender doesn’t care because it’s not on their model.
Personal guarantee structure misaligned. SBA loans require unlimited personal guarantees from anyone with 20%+ ownership. Most searchers sign without negotiating release triggers, second-position carve-outs, or spousal exemptions where state law allows. Once it’s signed, you live with it for ten years.
Seller note structured wrong. If the seller’s holding paper, that note’s structure determines whether you can refinance, whether you can sell, and whether you can absorb a bad quarter without triggering default. Most lenders won’t engage with the seller note negotiation because it’s not their paper. It is, however, your problem.
This is where Sovyrn engages.
The capital stack
Four structures. One transaction. Get the stack right or pay for it later.
Most acquisition deals stack two or three of these. The right combination depends on deal size, seller flexibility, your equity check, and your post-close working capital needs. We design the stack first, then match lenders.
01
SBA 7(a) Acquisition Loan
The workhorse for sub-$5M deals. Up to 90% leverage on purchase price. Government-guaranteed which means lower equity requirements and longer amortization than conventional debt. Trade-off: extensive documentation, personal guarantees, and 60–90 day close timelines.
Best for: First-time searchers buying $1M–5M businesses with strong cash flow and clean financials.
02
Conventional Acquisition Loan
For deals above SBA limits or buyers with the equity and credit profile to skip the SBA process. Faster close, less documentation, more flexibility on covenants and collateral. Higher equity requirements (typically 25–40%) and shorter amortization (5–7 years vs. SBA’s 10).
Best for: Repeat buyers, deals over $5M, or strong-credit first-timers who can stretch on equity.
03
Seller Financing
Seller carries paper for some portion of the purchase price — typically 10–20%. Critical for SBA deals (the SBA likes to see seller skin in the game) and useful for stretch deals where the senior debt won’t go all the way. Structure matters enormously: standby periods, subordination, default triggers, and prepayment terms all determine how livable that note is.
Best for: Most SBA deals. Stretch deals where buyer needs flexibility. Trust-building when the seller is reluctant to fully exit.
04
Mezzanine / Sub Debt
When senior debt and seller note still don’t reach the purchase price and you don’t want to dilute equity. Subordinated to senior debt, priced higher (10–14% range), often includes warrants or PIK interest. Less common in the sub-$5M space but useful for $5M–25M deals where the gap-filler matters.
Best for: Larger deals where senior debt + seller note + your equity still leaves a financing gap.
The process
How we structure acquisition financing.
Search funds and self-funded searchers come to us at different stages. Whether you have an LOI in hand or you’re modeling a target you found last week, the work moves at deal speed.
Apply through Caliber
Five minutes covering your search status, the target if you have one, your equity capacity, and your timeline. No pitch deck required. We need enough to assess fit — not a full diligence package.
Capital stack design
If you have a target and an LOI, we’ll model the stack — SBA 7(a) versus conventional, seller note structure, working capital reserve, total leverage. If you’re earlier, we’ll design what your buyable target profile looks like given your equity check and the lender appetite for that segment.
Lender match
Acquisition lenders specialize. Some focus on tech-enabled services. Others won’t touch construction. SBA preferred lenders move faster than non-PLP lenders. We match you with two or three lenders likely to underwrite your specific deal — not a generic broker dump.
Closing support
Embedded through commitment letter, term negotiation, and final docs. The structure decisions made between term sheet and close determine whether the deal is livable for ten years. We’re in the room for those.
Why Sovyrn
I’ve underwritten a business I was about to buy.
I’ve sat on both sides of the acquisition table.
Most acquisition financing advisors have never been a buyer. They’ve packaged loans, brokered them to credit committees, and collected commissions. They have not stayed up at night running working capital scenarios on a business they were about to personally guarantee debt against.
I have. I’ve used acquisition capital myself. I know what it feels like to look at the SDE multiple your seller is asking for, model the post-close cash flow, and decide whether the equity check is worth signing the personal guarantee. That experience is in the room on every call.
I came up through institutional capital markets.
Before that I traded global macro derivatives on Wall Street. My job was to understand how capital is priced, how risk is structured, and why two seemingly identical credits get very different terms. That perspective is wasted on most middle-market acquisition deals — except when it’s the difference between a clean close and a deal that breaks at the eleventh hour.
And I think like an operator.
I’ve built and run a federal contracting business at scale. That means I know what the day after close looks like — when the seller hands you the keys and the customer concentration risk you priced suddenly walks into the conference room. I structure deals against that reality, not against the lender’s eligibility worksheet.
What you get from Sovyrn: Capital structure designed against the deal you’re actually buying — not the loan the lender wants to write. Lender introductions filtered for fit and willingness to engage with your specific target. Negotiation support through term sheet, commitment letter, and final docs. And honest counsel on which deals to pass on, because the wrong acquisition is more expensive than no acquisition at all.
Common questions
What searchers and self-funded buyers actually ask.
What’s the typical capital stack for a $3M SBA acquisition?
A typical SBA 7(a) acquisition at $3M purchase price stacks roughly: 10% buyer equity ($300K), 5–10% seller note ($150–300K), and 80–85% SBA debt ($2.4–2.55M). Plus a working capital reserve of 60–90 days of operating cash flow on top of the senior debt — usually built into the SBA loan or sourced from a working capital line. Variations on this baseline depend on industry, seller flexibility, and your credit profile.
How much equity do I need to bring to a search fund deal?
For SBA 7(a), the floor is 10% buyer equity — but that 10% needs to be unborrowed, sourced funds you can document. For conventional acquisition financing, expect 25–40% equity depending on lender and deal quality. For traditional search funds backed by investors, the equity comes from your search fund LPs and you typically don’t write a personal check at acquisition — but you also don’t capture the personal upside that a self-funded searcher does.
SBA 7(a) versus conventional acquisition loan — which is right?
SBA 7(a) wins on leverage (up to 90%), amortization (10 years), and accessibility (more lenders compete for deals under $5M). Conventional wins on speed (30–45 day close versus 60–90 for SBA), documentation burden (substantially less), and flexibility on collateral and covenants. If you’re a first-time searcher buying a $2M business with strong cash flow, SBA is almost always the answer. If you’re a repeat acquirer doing a $7M deal with 35% equity, conventional usually structures cleaner.
When does seller financing make sense?
Most SBA deals will require some seller financing — the SBA likes to see seller skin in the game and most preferred lenders want to see 5–10% in seller paper. Beyond the regulatory reasons, seller financing is useful when: the seller’s transition is critical (notes can be tied to consulting agreements), when you need stretch on the senior debt, when you want to preserve working capital, or when the seller is reluctant to fully exit emotionally. The structure of that note — standby period, subordination, prepayment terms, default triggers — matters more than most people realize.
How does Sovyrn make money — are you taking lender commissions?
Sovyrn is paid by you, not by lenders. We charge advisory fees structured against the engagement scope — capital stack design, lender selection, negotiation support, closing support. We do not take lender commissions, kickbacks, or referral fees from the financing partners we recommend. That alignment matters because it means the lender we recommend is the one most likely to fund your deal — not the one paying the highest broker rebate.
What size acquisitions do you work on?
Sweet spot is $1M–15M enterprise value. Below $1M the SBA process gets disproportionately expensive relative to deal size and you can usually self-source. Above $15M you’re typically dealing with private equity or family office capital, where the structure conversation is different. The pillar audience here is searchers and self-funded buyers in that lower middle market range where the difference between a well-structured deal and a poorly-structured one is the difference between a successful operator transition and a deal that haunts you for ten years.
Found the business. Now structure the capital.
Apply through Caliber and we’ll have a structure conversation within 24 hours.
Apply to Caliber Intake takes under 5 minutes — no pitch deck required