Leveraged Buying Power

Leverage Your Buying Power with an SPE

An SPE is a Special Purpose Entity that is set up as a limited partnership in order to acquire an existing business with the use of investment money. Typically, a prospective buyer only needs to put in 5-10% of the cash needed to complete the acquisition. The buyer may also receive a larger percentage of ownership in the company and a position in management, which may also draw a salary and a management fee.

Below is an example of a typical deal using an SPE. This can be done with any size purchase, however, it is generally used for businesses valued over $250,000. If you are interested in using this strategy or have questions, please telephone William Thomas 561-914-1182.

  • We analyze all the possible avenues for a particular deal of interest.
  • A buyer with experience in a particular industry will put up 5-10% of the purchase price.
  • The buyer is made a general partner of a limited partnership (management).
  • Florida Business Brokers may choose to invest in the business and assist in the management (investors need to see experience and competent managers).
  • The buyer and FBB share a management fee (10-15%).
  • The buyer may receive a salary position in the company for daily supervision work.
  • We pitch the deal to lenders and investors in order to raise the rest of the capital.
  • The investors become limited partners meaning that they do not have management authority, they only share in the profits.
  • The arrangement is usually for a set period of time (5-10 years).
  • The profits should increase over the period of the arrangement and the business is sold for a profit in the end.