How much of the purchase price do you think I would be able to finance given the existing cash flow i.e. what percent of equity will I have to put up to secure a loan?
I have ten years of commercial banking experience with Bank of America, and I was as aggressive a lender as there was. With that in mind, you will have a very difficult time getting this deal done -- anywhere. This is a 100% cash flow deal, meaning that the only source of repayment for the loan is cash flow from the business. Usually, for a commercial bank (or any traditional lender) to do a deal like this, they need three sources of repayment: (1) cash flow from operations, (2) realization of collateral, and (3) resources of guarantors.
As you have already said, the business has no meaningful assets that can secure this loan, and you don't have the kind of net worth or collateral (personally) to support this loan. This is going to be a very tough deal to do.
Given the current credit market environment, what interest rate should I model and time to maturity?
As I said, I don't think this deal can be done at any price, but if you could get it done from a traditional source, then I think you're looking at prime plus 2-3%. Some lenders might use LIBOR as their basis, though. I think you'd be lucky to find someone who would do this over a 5-7 year fully amortizing period.
Will I have to sign a personal guarantee? What if I have no personal collateral to offer?
You would almost certainly be required to sign a personal guaranty. One of the reasons this is required is to ensure that you are helpful should they have to liquidate the business. You are not going to impair the value of the business when it is in your best interest to get as much cash from it as possible. Not having any personal collateral is definitely a strike against you.
It sounds harsh, but the reason that not having collateral is such a strike against you is that, what the bank is really saying is, "What have you done with you life professionally such that you don't have any assets to show for your effort? If you have not been able to build your assets and net worth so far, why would that change?" You need to show that you have a history of being the kind of person who makes smart moves with his finances, and it's hard to show that when you don't have any assets. Again, I know that sounds harsh, but it's reality.
Would I have more success to secure financing with the use of an investment banker (for capital raising purposes)? What do they typically charge (is it similar to what they charge on a sell side service)?
I would be very, VERY cautious working with an "investment banker" or other broker, consultant, or intermediary. Regrettably, many people in this business are dreamers who do not have good connections or capabilities. In some cases, they are honest people, but they just don't know how to get deals done. In other cases, they are nothing more than scam artists, who try to whack you for an upfront fee, then fail to deliver anything. That is not to say that all upfront fees are out of line. When I used to do this sort of work (after my Bank of America days) we would always secure a small fee not only to cover our out of pocket costs for memoranda preparation, etc., but also to know that there's a committment on the part of the client -- that he is not shopping the deal all over the place. But please, please, please do your homework before working with any intermediary.
A lot of places are still using "the Lehman formula" (although now that Lehman is in Chapter 11, maybe they will change the name) of 5% for the first million, 4% for the next, and so on, down to 1%.
