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Ep 21: Mythbusters: Cash Flow Over Collateral: How Lenders Really Assess Business Acquisitions
In this episode of 7 Minute Takeover, Elizabeth MacRae and Eamonn Gamble break down one of the biggest misconceptions in buying a business—how lenders actually evaluate acquisition financing.
While real estate lending revolves around loan-to-value (LTV), business lenders care far more about cash flow and debt-to-EBITDA ratios. Eamonn explains why EBITDA is the gold standard for measuring a business’s debt capacity, how lenders “stress test” earnings, and what typical debt-to-EBITDA ranges look like. Elizabeth underscores why “cash is king” for lenders and how many buyers get blindsided when…
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