How to Finance a Fence Installation Business Acquisition

Pros

• Finances up to 90% of purchase price, minimizing buyer equity injection to as little as 10%
• Can include working capital and equipment in a single loan, simplifying the capital stack
• 10-year term reduces monthly debt service and preserves cash flow through seasonal slowdowns

Cons

• ×Requires personal guarantee and collateral review including fleet and equipment appraisals
• ×Underwriters scrutinize customer concentration — top clients exceeding 20% of revenue may trigger conditions
• ×Approval timelines of 60–90 days can slow deal momentum in competitive acquisition situations

Pros

• Reduces buyer cash equity requirement and signals seller confidence in the business's continued performance
• Deferred payments can be negotiated, providing breathing room during ownership transition periods
• Structuring as a standby note satisfies SBA lender subordination requirements without additional complexity

Cons

• ×Seller may resist note if they need full liquidity at close for retirement or real estate purchase
• ×Default risk falls on the buyer-seller relationship, which complicates disputes during earnout periods
• ×Subordinated position means seller recovers last if the business underperforms post-acquisition

Pros

• Aligns seller incentives with post-close performance, especially when owner relationships drive revenue
• Reduces upfront capital required and limits buyer downside if revenue declines after transition
• Motivates seller to actively support transition, introductions to GC clients, and crew retention

Cons

• ×Disputes over earnout calculation are common — EBITDA definitions and add-backs must be clearly documented
• ×Seller loses control after close but remains financially exposed to buyer's operational decisions
• ×SBA lenders may not count earnout as part of the equity injection, requiring additional buyer cash