Looking for Cutting Edge Advice on Buying And Financing A Business
Information on buying financing a business purchase acquisition in Canada . Buy a company , even a competitor, the right way!
More and more Canadian business owners and managers are looking toward executing and financing a business purchase acquisition. Buying a company, even a competitor has become one way to succeed on a growth strategy. But when you buy a firm are there some secrets to both not overpaying as well as some solid advice on how to finance the acquisition? We think there are.
Naturally the big guys execute acquisitions and mergers almost every day, all day. Valuations, currency, and business politics and competition play a huge role in determining the success of those deals, which we read about everyday.
But how about your transaction in the small to medium size (SME) sector in Canada. How do you access the cash and finance mechanisms that make a transaction work?
Many clients we speak to are looking to maximize on what they feel are ' undervalued' firms, in some cases the company you may be looking at might be in dire straits.
Naturally there are reasons why your acquisition target is undervalued, or in those dire straits we talk about. The reality is that more often than not it’s not just the price or value that you have agreed on, but the post sale cash flow and operations of the acquisition that will make or break your deal.
Where can things many times go wrong is simply when you don't spend enough time on the financials or the careful financing of the purchase. And boy is you committing a grave mortal sin when you overpay for a deal. The concept of overpaying and then not being able to execute on your overall strategy now puts you in... You guessed it... dire straits.
So what are they key areas of ' sinning ' when you buy a firm, from a financial and financing perspective. Naturally, as we have said, valuation is important, as well as a careful study or what you could call ' risk areas'.
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Financing the transaction must have you taking a hard look at profits, cash flow, and how your final balance sheet will look. It's very important to focus in on what cash flow the new company will generate. This is when your new ' economies of scale kick in.
Three other key areas of focus are total new sales growth, what assets are needed in the new combined entity, and how working capital will be financed. This includes growth in receivables, inventories, etc.
Don't get caught in other misconceptions - the concept of 'diversifying ' can sometimes turn into a fiasco. Diversifying into a completely different industry can bring both danger and financial risk. And don't think you can rely totally on the acquired management team to totally achieve your goals. That is up to you and your team!
There you have it, some pitfalls... to avoid when you buy a company through some sort of merger or acquisition process. Speak to a trusted, credible and experienced Canadian business financing advisor for tips and solutions to buying and financing a business in Canada.
CANADIAN BUSINESS ACQUISITION FINANCING EXPERTISE
Stan Prokop - founder of 7 Park Avenue Financial –
http://www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :
http://www.7parkavenuefinancial.com/financing_business_purchase_acquisition_buying_buy.html
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