Acquiring Minds✓ Verified in SBA records

Factory Life Buying A Manufacturer With 1m Sde

with Ben Jasper · Plastic bag manufacturer

LenderHawk analysis. Not affiliated with or endorsed by Acquiring Minds.

The Deal

Business

Plastic bag manufacturer

Industry

Plastic bag manufacturing for pharmaceutical, food, apparel, and industrial applications

State

Purchase Price

$3.5M

Multiple (SDE)

3.5x

Year

2022

Financing

SBA 7a

Revenue at Purchase

$7.0M

SDE at Purchase

$1.0M

LTV at Close

67%

Deal Source

broker

Financing Structure

$2.3M

$700K

$455K

SBA 7(a)

$2.3M (67%)

Buyer Equity

$700K (20%)

Investor Equity

$455K (13%)

6.0

Strategic Rationale

Transition from high-stress, time-consuming hedge fund career to acquire a stable, recurring-revenue manufacturing business that provides predictable hours, family time, and controllable lifestyle while maintaining income generation.

Post-Acquisition Performance

After 14 months, despite 10-15% revenue decline due to macro manufacturing headwinds, cash flow remains flat after accounting for excess inventory purchases and equipment investments; equity investment fully recovered in approximately 12 months, effectively owning business debt-free while positioning for future growth and management delegation.

Key Takeaways

1Spend significant time interviewing business owners about their daily routines and operations, not just reviewing financial statements, to understand hidden complexity and operational requirements.
2Manufacturing businesses with old, custom-made equipment have high barriers to entry but require finding and retaining specialized maintenance talent and building vendor networks for sourcing parts.
3Employee retention and alignment require understanding individual priorities beyond profit-sharing, such as schedule flexibility and time with family, which can create business stickiness.
4The first two months of ownership involve intense knowledge transfer that is mentally and emotionally taxing; videotaping processes and creating detailed manuals is essential when the seller cannot stay long-term.
5Small manufacturing with recurring B2B customers and stable demand for specialized products provides more predictable cash flow than cyclical businesses, despite commodity-like perceptions of plastic bags.

Matched SBA Loan Records

SBA loan filings we matched to this deal

Santander Bank, National Association95%

$13KP + 6.00%FY2010

TD Bank, National Association95%

$50KP + 3.50%FY2014

Manufacturers and Traders Trust Company95%

$350KP + 2.10%FY2014

The Deal

Business

Plastic bag manufacturer

Industry

Plastic bag manufacturing for pharmaceutical, food, apparel, and industrial applications

State

Purchase Price

$3.5M

Multiple (SDE)

3.5x

Year

2022

Financing

SBA 7a

Revenue at Purchase

$7.0M

SDE at Purchase

$1.0M

LTV at Close

67%

Deal Source

broker

Financing Structure

$2.3M

$700K

$455K

SBA 7(a)

$2.3M (67%)

Buyer Equity

$700K (20%)

Investor Equity

$455K (13%)

6.0

Strategic Rationale

Post-Acquisition Performance

Key Takeaways

1Spend significant time interviewing business owners about their daily routines and operations, not just reviewing financial statements, to understand hidden complexity and operational requirements.

2Manufacturing businesses with old, custom-made equipment have high barriers to entry but require finding and retaining specialized maintenance talent and building vendor networks for sourcing parts.

3Employee retention and alignment require understanding individual priorities beyond profit-sharing, such as schedule flexibility and time with family, which can create business stickiness.

4The first two months of ownership involve intense knowledge transfer that is mentally and emotionally taxing; videotaping processes and creating detailed manuals is essential when the seller cannot stay long-term.

5Small manufacturing with recurring B2B customers and stable demand for specialized products provides more predictable cash flow than cyclical businesses, despite commodity-like perceptions of plastic bags.