Business Acquisition Financing. 3 Things You Never Should Forget In Funding Your Purchase

Going Behind The Scenes In Buying and Financing A Business


OVERVIEW – Information on business acquisition financing in Canada . Critical aspects of financing any purchase or merger



When it comes to business acquisition financing in Canada there's several myths and things you should never forget when arranging and funding your purchase. Let's try and cover off 3 basics, and we're going to strive to be fairly non technical in nature... which is a good thing, right?

First point is simple the value and valuation. While a lot of people may tell you it’s all about the ' future cash flows / earning ' of the business that might not necessarily always be the case. Part of the challenge here is that the formulas around this calculation probably work best with larger public companies where you probably have a better chance of predicting the future.

So our basic caution is that as a buyer you should incorporate other factors and info into your final value decision; and make sure there are at least some cash flows today. not just ten years from now!

Point number 2 is simply the concept around the assets of the business. These days they can be a combination of hard and soft assets and you can't necessarily treat them the same. So the take away here is that each asset should be analyzed and value in the context of what they do for the business.

When we talk to clients who feel they have ' overpaid' for businesses they purchased and are now running it often becomes very clear that they never looked at each asset ' under the hammer'. That's the term for the idea of liquidation and the value of the asset that it might bring when financed. A good example might be the balance sheet accounts of inventory and accounts receivable. Are they really ' liquid ' and ' moving' respectively, or are they in fact uncollectible and waiting to be written off... respectively!

In general it is safe to say that hard assets do enhance the value and financeability of the purchase. And when you have a combination of hard assets and pretty good cash flows you definitely have found the winning combination.

Our final point pertains to both buyers and sellers and its all about disclosure. One writer referred to it as sellers who keep their dark sunglasses on!

That of course refers to sellers keeping buyers in the dark and on the other side of the coin purchasers opting to stay in the dark without doing the right amount of due diligence. Can a deal be done in the dark? Absolutely ... will it be successful for both parties? Probably not!

There's an old saying that the best deal /negotiation is when both parties feel they didn’t get all they wanted, and there’s probably a lot of truth in that.

In Canada you can finance a business purchase via:

SBL Govt loans
Asset based lending
Bank term loans
Bridge loans
Cash flow loans - secured/unsecured

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can help you with business acquisition financing.

7 PARK AVENUE FINANCIAL
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/business-acquisition-financing-funding-purchase.html



7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com

Canadian Business Financing . Learn From These Commercial Credit Mistakes!

Tuition In Business Financing Experience Can Be Very Expensive . Learning from Business Failure !



OVERVIEW – Information on Canadian business financing options . How business can learn from commercial credit failures




It's not always Happy Talk! When it comes to Canadian business financing and commercial credit in Canada we can learn a lot about the mistakes we and others have made in the past, right. We're full of sayings today, but our other favorite is that there is a lot of tuition

to be paid in the school of business experience.

In many cases when it comes to business finance a mistake can be corrected - the worst case is of course business failure, bankruptcy,etc Those experiences make business owners and managers shall we say ... ' resilient '.

Securing financing improperly is one of the worst mistakes your business can make. And that doesn't necessarily mean rate, it means structure and purpose of the financing. And when you don't know how and when to raise capital or monetize assets that just compounds the problem.

From your lenders perspective it’s all about risk and the amount they are willing to take with your business. So you become a winner when you obtain the financing you want and your bank or commercial finance firm feels they have not taken excessive risk. That's a great point to remember.

To make their loans and financing ' less risky ‘banks and other finance firms make ask for personal assets as collateral. While in many cases that can't be avoided the business owner should take great caution to over collateralize their lender. That mistake becomes very costly in the even of a business failure.

Matching the right term to your financing is critical. Remember that a bank or finance company, Lease Company, etc always feels less certain about a longer term. Why? Simply of course because the long term future is uncertain for any business.

Many businesses are forced to give up some for of equity in their early years. That might be from an investor, a lender, a partner/strategic partner etc. When you do that you're of course giving up significant returns at a future point in time.

We probably couldn’t count the number of times we have felt that clients have simply aligned themselves with the wrong firms, people and financing. In a perfect world you want to deal with people who are knowledgeable about your company and industry.

We hear a lot about ' bootstrapping ' these days. Essentially it’s utilizing personal and ' friends and family ' savings as opposed to seeking outside funding. That’s good and bad we think. You do have less or no external debt, but again you've pledge personal assets that ultimately will affect your personal credit history. The best bootstrapping arrangement is one in which you feel very confident about future cash flows.

What is the key take away today ?Simply that Canadian business financing, either via debt or cash flow and commercial credit asset monetization must be taken on in the context of short term, long term, and daily operations financing . There are serious implications to taking ' other people’s money '. You can pay a lot of expensive tuition when you don't understand your needs and potential sources of commercial credit in Canada.

Seek out and speak to a trusted, credible Canadian business financing advisor who can assist you with your commercial credit needs, with the benefits of experience.


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/canadian-business-financing-commercial-credit.html

7 PARK AVENUE FINANCIAL = CANADIAN BUSINESS FINANCING EXPERTISE


7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com

Looking For User Friendly Debt Capital And Asset Based Financing Choices?

Strategies For Successful Business Financing


OVERVIEW – Information on accessing the right debt capital and asset based financing choices in Canada



When corporate partners and venture capital aren't available, or don't make sense the Canadian business owner / manager turns to debt capital and asset based financing for working capital and asset monetization. Wouldn’t it be great to have some solid choices in that area? The reality is that you do, but just might not know it. Let's explain.

We suppose we can make the case that debt is lower risk than equity, plus we always know what’s going on vis a vis payments of principal and interest. The potential danger is that by virtue of your covenants and the collateralization of assets they may be claimed by your lender who is primarily interested in protecting their capital.

We sometimes thing that the above scenario is how the business owner/manager believes the lender wants to behave. That certainly is not so, as what lender would really want to be repaid from the normal operations and cash flows from your business.

The actual ' assets' of your business are what normally drives most of business financing in Canada. Because these assets have specific values balance sheet accounts such as buildings, inventory, and receivables are in fact the collateral behind your borrowing. No mystery there.

The alternative to hard asset collateral is the cash flow monetization of assets. And , oh yes, you can actually borrow against future cash flows , sometimes even on an unsecured basis if you can prove that historical and future cash flows are real and reasonable and carry a normal element of risk.

How does the lender in Canada measure the risk of cash flow and debt repayment? This is primarily done via two rules of thumb, the cash flow formula known as EBITDA , as well as the ratio ( we call them relationships ) of your total debt to your total shareholder equity . These ratios and calculations are then typically embedded into a loan document that makes them, in essence, a condition of the loan. Bottom line, a healthier business with good cash flow and low or reasonable debt has a great chance of achieving more debt capital. If EBITDA and debt / equity are ' out of whack ' then its safe to say that challenges in obtaining debt capital and asset financing will ensue!

When accessing both debt capital and asset financing its important to determine what category or time frame you are looking to address. By that we mean short term financing of one year or less, long term financing that typically might be 3-5 years, and finally ongoing line of credit financing for your daily ongoing operations

While debt capital in Canada primarily comes from banks, insurance companies and pension funds for medium sized to larger corporations there are numerous independent commercial finance companies that address the start up and SME sector in Canada. It' all about knowing who to turn to and when.

The key point to remember? It's a simple one. Assets can be financed!

Bottom line today. Pretty simple - simply that asset financing and cash flow financing for debt capital are available through collateralizing your receivables, inventory, equipment, real estate, etc. The trick is knowing who, what, when, and where! Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in your debt capital and asset finance needs.

7 PARK AVENUE FINANCIAL
CANADIAN BUSINESS 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/debt-capital-asset-based-financing-choices.html





7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com

Leasing Assets ? Got What It Takes For Financing Equipment With Your Lease Company . You Do Now!

Managing Your Equipt. Leasing Relationship?

OVERVIEW – Information on leasing assets in Canada . Financing Equipment Via A Lease Company requires this fundamental knowledge


Leasing assets in Canada. Quite frankly it’s a relationship you're in when you’re financing equipment, and a lot of Canadian business owners and financial managers could do better when financing equipment and assets if they managed and partook in that relationship with their leasing company. Let's explain!

Selecting assets for your business is tough enough these days when it comes to technology, pricing, cost, etc. The business owner or financial manager doesn't need to have that same level of concern around the financing though. It's a simple case of being a bit more proactive in the relationship. We're told a relationship is a ' connection or involvement ' -

so we're saying it's about time to get involved with that lease company.

Knowing the bottom line and the actual financing cost and benefits of asset acquisition is what it is all about.

In every lease transaction it's important to understand the inflows and outflows of cash flow in your company as it relates to assets. Two key points here - one is that the rate and type of lease will determine your monthly payment or cash flow - but the business owner/ manager often doesn't consider the cash inflows or benefits that come from acquiring many revenue producing assets . It’s important to look at the total picture, especially, as we said, if you have got a revenue producing asset on your hands.

Part of every concern the business owner/ manager shares around acquiring assets is the lease versus buy decision. So do spend some time on determining if your asset decision makes good common sense re benefits, costs, and cash flows.

In lease finance it's all about ' cash flow ' and monthly payments. True of false? Well we can offer up for sure that most clients seem to place the most emphasis on those two points. While it’s fairly simply to determine monthly payments and total interest costs etc don't forget also that the type of lease you enter into also has some effects on your rights and obligations in your equipment financing transactions.

The ability to terminate a lease, return the asset, or even extend the lease simply makes it critical to having a solid relationship with the right lessor.

Lease companies use several strategies to maximize income, and of course no one denies or should deny their right to make a reasonable profit. But just proactively managing your relationship with your finance firm allows you to understand key lease company profit components of your transaction. For instance, have you ever asked your company if they have calculated that great rate you just got ' in advance ‘, or ' in arrears '. You just might be surprised at the answer, and the cash flow outcome.

Our bottom line today - take the initiative in managing and understanding the relationship between you, the asset in question, and your lease company partner. Seek out and speak to a trusted, credible and experienced Canadian business financing professional when it comes to leasing assets in Canada.

7 PARK AVENUE FINANCIAL
CANADIAN LEASE FINANCE 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/leasing_assets_financing_equipment_lease_company.html

AR Business Funding In Canada . Going Insane Trying To Understand Accounts Receivable Financing ?

Avoiding The Wrong Type Of A/R Financing ? Here’s How!


OVERVIEW – Information on accounts receivable ( ar ) business funding in Canada . Costs and benefits explained





Canadian business owners and financial managers hear a lot about the business funding known as accounts receivable A/R financing. But occasionally when they try and understand how this financing works, what it costs, and what the benefits are they sometimes feel like they are going a bit ... crazy !

Is there a way to uncomplicate what frankly is a pretty simple method of funding your business? We think there is... all you need is some basic clarity!

In fact one way to look at how this whole solution works is to sometimes put yourself into the position of the finance firm offering you this solution. At the essence of your transaction is the very simply concept of selling your sales, aka your ' a/r ' as you generate revenue to monetize that asset into immediate cash flow. Simple as that.

So where do business owners and managers feel themselves going a bit ' crazy ' in trying to understand the process and interpret how this affects, and benefits their firm.

In talking to clients here are the basic issues that typically need some good old fashioned clarity. They include:

Understanding who in fact is using AR Finance and how long it’s been around

What is the pricing and how does that affect profits?


What facility size makes the most sense?

Are there any risks involved?

Are some firms not able to use this financing?

Who should I deal with to ensure this type of funding makes sense to my firm?


Most of our clients probably don't want to be guinea pigs when it comes to finding out they are the first to try something - with all the risks that come with that. So the good news is that Accounts receivable finance has been around for ... hundreds of years! Starting in Europe and moving to North America. Many simply call the industry ' factoring ' and in Latin that word means ' business doer ‘. Many early settlers to North America actually had their trips and early businesses financed by these ' factors '. So... bottom line, don't feel like you're being ' leading edge ' when it comes to new methods of financing your business - everyones doing it!

You only need to understand 3 simple concepts when it comes to cost of AR finance - they are:

The discount percentage you are being offered
The amount that is advanced against your receivables (typically 90%)
The time it takes your client to pay


Once you understand those basics you're close to being an expert in receivable business funding.

The reality is that even one small sale could in fact be financed using this method, on a one time basis. But the closer reality is that typical facilities tend to be in the 100k per month range or higher. And the upper limit? Frankly Scarlett - there isn't one!

We can make the statement that no additional risks in using this method of financing exist - any risk you currently take in extending credit to clients and monitoring their payments essentially stays the same. Customers that don't in fact like ' risk ' can opt to insure receivables.

Any business that generates sales and sells on credit can in fact utilize factoring. The type of facility that we recommend most to clients is a confidential facility, which allows them to bill and collect their own sales - retaining full control and client contact.

Still going crazy trying to understand factoring in Canada. Hopefully not! Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can clear the air. Quickly!

7 PARK AVENUE FINANCIAL
CANADIAN A/R 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/business_funding_accounts_receivable_ar_finance.html


7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com

Is There A Perfect Debt Financing ? Achieving Business Loans And Rates And Structures That Make Sense For Your Company

Looking For An Answer To The Right Business Loan Question?

OVERVIEW – Information on debt financing and business loans in Canada . What rates and structures work best for your firm ?




Not getting debt financing right in Canadian business finance can destroy a lot of prospects your company might have - we suppose it could also destroy your firm... period! So the right amount of debt, and business loans and rates your firm can manage is critical to long term success.

When credit is of course available it’s both easy and tempting to take on more debt. In fact if you have done that in 2008 right around the time the global economy imploded we are pretty sure there was some sledding at that time.

Of course it’s all about having the right objective in mind when your firm contemplates more capital. In some cases thought its not necessarily additional debt on the balance sheet that is going to get you more cash flow - you might also find that simply monetizing assets without taking on debt gets to the goal line just as fast... and in better shape!

Part of the temptation of debt is that your firm will miss opportunities along the way if you don't ' bulk up ' on capital. So that’s when some pretty basic questions come into play. They are as follows -

What in fact is the right amount of debt for your company to take on and manage?

Do you need to totally change your outlook on your capital structure - i.e. the right amount of debt and equity?

Can your projected cash flows sustain debt?


It is safe to say that if your firm has a lower debt level then you're probably more comfortable in managing through challenges. The more sophisticated finance folks tell us that the amount of carefully managed debt simply increases your overall returns - that’s a good thing. But when your debt levels are too high via business loans and rates that severely affect your cash flow the perception can easily arise, from customers and suppliers, that you are... well ' in trouble '.
It also is safe to say with the wrong amount of debt your firm is more prone not to be able to make new investments in capital, research, and marketing. Once suppliers start cutting you off that forces you to react with a new behavior to inventories you are carrying, thereby affecting sales and revenues. The finance books tell us tor most firms that a 2:1 ratio, o relationship of debt to equity is the right mix. That varies of course between different industry segments.
A good way of looking at new business loans, rates, and other debt alternatives is for the Canadian business owner and financial manager to simply as ' what could go wrong '?

Many clients are pleasantly surprised to hear they can monetize assets to increase cash flow and business opportunities. This can be done by:

Receivable financing
Asset based credit lines
Sale leasebacks
Financing Tax Credits
Supply chain / PO Finance


So... a bottom line? Simply that debt financing comes with risks and rewards, a classic case of Caveat Emptor. Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in maximizing the right debt finance and asset monetization strategies

7 PARK AVENUE FINANCIAL
CANADIAN DEBT FINANCING AND ASSET MONETIZATION 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/debt-financing-business-loans-rates.html


7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com

The Scuttlebutt On Financing A Franchise In Canada . Buying Franchises Requires The Right Type Of Loan

Canadian Franchise Financing Strategies


OVERVIEW – Information on financing a franchise . What type of loan and finance is required when buying franchises in Canada


Looking for some good Scuttlebutt on franchise financing in Canada? And who doesnt love the word ' SCUTTLEBUTT ' - It was the drinking fountain on ships... sailors hung around and shared rumors and gossip, ie Scuttlebutt!

While we are big fans of the term itself what’s more important is to dispel rumors and gossip around the reality of getting a franchise loan in Canada. The one thing we can assure clients is they need a solid business plan and financing package prior to starting the financing process.
While a lot of that information might come from your franchisor you’re basically preparing a financial overview of your new business. And from the lenders perspective they simply want to know how loans they make to franchises will be repaid. Fair enough, right!?

So what amount of funding is in fact required to purchase a franchise in Canada? There are several components to the project - they include the franchise fee, working capital, a loan for leaseholds and equipment or rolling stock, etc.

While all banks in Canada seem to have a lot of content on their websites about financing franchises directly the reality is that this is rarely done on the strength of your proposal alone. So when considering approaching a bank , either alone or with an experienced advisor you might just find that really only two avenues of success for your franchise loan :

External collateral
The Government SBL Loan


While the franchisee certainly has a right to offer up personal collateral, i.e. homes, savings, etc that is not the optimal way to finance a business. That is why thousands of business owners over the years have chosen the Government BIL loan to facilitate the financing of their new business. For financing needs fewer than 350k it’s a solid mechanism for getting you to the franchise goal line!

While specialty franchise financing does in fact exist in Canada it typically requires your franchisor to be part of a larger program which might not necessarily be the case. Oh and by the way lots of third party commercial finance firms such as equipment finance companies can also assist you in portions of your financing.

If we had to summarize a short road map of success in franchise loans in Canada it would be pretty simple:
Have a strong business plan / loan package
Be prepared to demonstrate good personal credit history and business experience
Be able t demonstrate that you can come up with a solid portion of equity in the business - no one is going to finance 100% of the project.

So, if you want to plough through all the scuttlebutt around a franchise financing loan in Canada seek out and speak to a trusted, credible and experienced Canadian business financing advisor.



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-franchise-loan-buying-franchises.html



7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653

Email = sprokop@7parkavenuefinancial.com

Afraid Of Debt Factoring? Business Factor Companies Actually Offer You A Lifeline On Cash Flow And Working Capital !

Something Different in Cash Flow Financing ?


OVERVIEW – Information on debt factoring in Canada . How business factor companies work . Which one is best for your firm?




Debt factoring is a bit of a misnomer here because when you deal with a business factor company you are actually not incurring any debt... but we can't stop clients from calling things what they want to!


Business factor companies in Canada often maintain they offer your firm a ‘lifeline '

when it comes to cash flow generation. Does debt factoring, aka ' receivable financing ' really work, and if so... how!

Any company that sells on credit and has receivables can generation faster cash flow via factoring. The actual process could not be simpler - it's either a one time or ongoing sale of your A/R as you generate sales. Some advantages are that you can finance what you what, and when you want. If you have signed up for the right facility you are under no obligation to finance all your sales, just the amounts you need under your facility.

As we said, factoring is not a ' loan ' per se. That's where the misnomer lies, in that you are not creating or adding any debt to the balance sheet, you are simply monetizing sales, as you make them!

In general most facilities of this type in Canada are on a recourse basis, simply meaning that your firm is still responsible for the overall risks in collecting the receivable, and collecting it in a timely fashion. Since the main component of factoring pricing is ' time ' you benefit significantly by financing and then focusing on collecting those receivables. Large corporations maintain that focus... you should also.

Factoring pricing is widely misunderstood in Canada. The three parts of the pricing of receivable finance are as follows -

The advance rate
The fee
Time

If you're dealing with the right firm you usually are able to obtain 90% advances on your receivables. The ten per cent becomes a hold back that is remitted to you promptly after your client pays. Discount rates are 1.5-2% on financing. That means that the finance firm will deduct that fee as their profit on every invoice based on a typical 30 day collection period.

And as we said that final component is simply how long the receivable is outstanding? So focus on collecting those sales!

Do we have a recommended type of facility? In general the best suited facility for your firm is a confidential A/R finance facility. Here you are financing your sales and at the same time maintaining the right to bill and collect our own A/R.

Speak to a trusted, credible and experienced Canadian business financing advisor who can ensure you are getting proper debt factoring finance.






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/debt-factoring-business_factor_companies.html



7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com

Purchasing A Company . Buying A Business In Canada Without Overpaying With These Tools !

Quality Decision Making When Financing And Buying a A business In Canada


OVERVIEW – Information on purchasing a company in Canada . When buying a business you need a solid level of acquisition analysis .. and financing



Purchasing a business in Canada - along with financing it, always makes more sense when you feel you have paid the right price! One of the biggest business news stories in the world in the last couple days was the discovery, apparently, that one of the largest technology firms in the world had (massively) overpaid for the business. That story seemed even more interesting to us because I toiled in that Tech giant for ten years . What a story!

Accusations from both sides, not surprisingly, abound. And much of those accusations are pointed at the legal and accounting firms that helped with the transaction. And we have met our share of clients who are struggling and wrestling with the financing they need based on having purchased a company at the wrong price, thereby incurring a lot of debt in the process... unnecessary debt!

As we can imagine, it's safe to say the ' financial fur ' is flying!

How then can Canadian business owners and financial managers protect themselves from these types of valuation mistakes when buying a business? Especially when they don't have access to all those high prices lawyers, accountants and valuation consultants.

The reality is that there are a number of common sense financial tools that you can in fact use when buying business and arranging acquisition finance. And they come at almost no cost! It's all about examining some very basic relationships around how a company operates, and these techniques could save you thousands/ millions.

A large part of the financing you need to purchase a business revolves around the relationship of accounts receivable and inventory to sales. When you learn to interpret these properly you are well ahead of the game, and hopefully your valuation and financing will make a lot more sense.

When you have a strong handle on the size of A/R and inventory to sales the financing you may need to finance the acquisition will simply make a lot more sense.

Let's take a look at A/R first. Most business owners know that they can measure the general health and quality of their receivables via a calculation known as DSO - Days sales outstanding. This measurement will basically tell you two things - the quality of credit that you are extending to clients and the difficulty or mismanagement that you are experiencing in collecting that sale. Pretty important stuff from a basic calculation, and as far as we have read that’s one of the key issues in that breaking news story we talked about vis a vis out tech giant’s acquisition.

Taking a hard look at the inventory situation simply allows you to determine if inventory is in fact being moved out of your current assets into the sales and receivables accounts.

How does the business acquirer then use this information to get a strong handle on sales , collections and inventory management . It's a lot simpler than you think, and the reality is that you can even use this simple calculation to monitor your own management effectiveness. Simply construct a basic chart that shows over any specific period of time your sales, A/R and inventory amounts. Monitor and analyze the relationships of these balances.

Example? No problem. Let's say sales go up 17% and you notice that A/R has now gone up 35%... with inventory going down by 5%. Is this bad, good, or who cares? The reality is that when you spend some time and also track the data you will see that in certain cases the numbers are out of whack, thereby identifying potential problems in A/R and inventory valuation.
It's up to you as the buyer to ask the right questions at that point!

In the case of our recent major news story the accusation seems to revolve around exactly the example we have provided - i.e. the cash conversion cycle slowing down because of sales behavior as it relates to A/R and inventory.

Is our calculation the be all and end all? Definitely not, but it also seems like it could have worked quite well of our Tech giants analysis team, as that seems to have been the problem.

Finally, all sorts of other issues need to be looked at also, they might include revenue recognition, expenses, accounting policy changes... and on it goes.

Bottom line - spending some time on the numbers will help you make a better decision when purchasing a company and financing any acquisition, large or small.

Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in acquisition finance.


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/purchasing-company-buying-business-acquisition.html

7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com

7 PARK AVENUE FINANCIAL
CANADIAN ACQUISITION FINANCE EXPERTISE

Alternative Finance Solutions? Why Non Traditional Financing Alternatives Just Might Work For Your Canadian Business

OVERVIEW – Information on alternative financing solutions for Canadian business. Non traditional financing provides significant financing opportunities




Not every one these days is totally clear on the term of alternative finance , so lets recap some non traditional financing alternatives that just might make sense for your business financing needs. And to quote ourselves you just might find that alternative, in some cases, is the ' new traditional '!

First thought that comes into a clients mind when they think of the need for business capital? Of course it’s the Canadian chartered banking system. But thousands of business owners and financial managers quickly find that while somebody seems to be qualifying for those loans and other bank facilities it isn’t them!

We don’t want to weigh in too heavily on why the banking solution isn’t always totally available for your business - it’s just a fact that the Canadian banks manage risk very well! But when you qualify boy are those rates attractive!

We will add one more point about the banking system in Canada, which is simply that while you might in fact qualify your needs, ironically may be deemed too small or too large. How ironic.

So that allows us to move on to a discussion on alternative financing vehicles that might just work for your firm. One of those is in fact a bank alternative that is non bank nature. It's the government guaranteed SBL loan program. Although it’s facilitated by a bank the majority of the loan is guaranteed under the INDUSTRY CANADA loan program, allowing you to tap into rates, terms and structures that are attractive.

To access the SBL program you need to seek a bank employee who is aware and comfortable with the program. And the other qualification is simply a loan package that covers off the basics, which isn’t hard as you might think. Your financials, a business plan, and some back up documentation and you are off to the races.

Another solid form of alternative financing is Asset based lending. These are non bank commercial credit facilities that secure, into a business line of credit your A/R, inventory, equipment, and real estate if applicable.

Almost any firm (with assets!) qualifies for ABL lines of credit - including manufacturing firms, service companies, technology companies, etc. Most facilities start at the 250k range and there is pretty well no limit on the upper end of an asset based deal. Oh, and by the way, some of the largest corporations in Canada use this ' alternative ' finance vehicle to run their business. Apparently (to quote us!) alternative is the new traditional for them.

Other forms of alternative finance? You just might be surprised. They include"

Receivable finance/factoring
Supply chain PO finance
Tax Credit Financing
Securitization of A/R


Seek out and speak to a trusted credible and experienced Canadian business financing advisor on how alternative finance can work for your firm... and you just might find that alternative is the new traditional!


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/alternative-finance-non-traditional-financing.html

7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com

Can Leasing Companies Solve All Your Asset Finance Needs ? Making The Right Equipment Financing Choices In Canada

Canadian Equipment Financing


OVERVIEW – Information on leasing companies in Canada . How asset finance solutions for equipment assist Canadian businesses .



Absolutely not. That's the short answer to the question of leasing companies in Canada solving ' all ' your equipment asset finance challenges. But we're pretty sure that 90% of the time they can, and those aren't bad odds, right?

In Canada there are currently hundreds of providers of equipment financing for asset acquisition needs of Canadian business. In a way that’s one of the challenges for the business owner / financial manager - namely who exactly do you turn to? The industry is certainly robust these days with larger corporations, brokerages, and small niche firms providing lease finance solutions from items we could call ' micro ticket ' to multi million dollar acquisitions of technology, airplanes, heavy equipment ... well .. you get the picture!

Many manufactures and distributors have formal or informal relationships with firms that will help you get the financing you need. Major players in a number of industries actually have full blown captive finance firms that are strongly incented and chartered with providing you with flexible financial solutions.

One of the advantages of dealing with a captive finance firm ( i.e. one that is related to the manufacturer ) is that your flexibility typically increases substantially, with various lease schemes ( schemes ?) offering your firm lease to own, lease to use, rental, or short term financing . Typically the shortest lease term in Canada tends to be 24 months, and longest terms are in the 5-7year range. That's of course unless you require a lower monthly payment for your new corporate jet!

If there is one key advantage of equipment asset finance in Canada it’s simply that the emphasis on the ' collateral ' to your transaction is, more often than not, just the equipment you are financing.

One of the alternatives to using leasing companies for financing needs is of course Canadian chartered banks. However here is where credit criteria are somewhat higher when it comes to balance sheets, income statements, and cash flows that meet bank requirements. We don’t mean to infer that the Canadian leasing industry is populated by drunken cowboys!

But we are definitely saying that overall credit flexibility is significantly greater when you use a non bank commercial leasing entity.

Also, most leasing companies will entertain the refinancing of an asset you already own to generate additional cash flow for your firm. This is of course the ' sale leaseback'. After you have reconciled with the fact that you might have to pay the sales tax twice this option still makes a lot of sense.

We encourage business owners to understand the key differences between lease to own and lease to use. That’s the capital lease and operating lease respectively, and there are significant differences to each of those lease solutions.

When cash flow and financial flexibility are important to Canadian business working with the right leasing companies can solve, not all, but a lot of your problems! Speak to a trusted, credible and experienced Canadian business financing advisor for assistance in asset finance solutions.


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/leasing_companies_equipment_asset_finance.html

7 PARK AVENUE FINANCIAL
CANADIAN LEASE FINANCE EXPERTISE

Key Issues In Factoring And Receivable Financing . Bringing Clarity To Solutions For Funding Receivables In Canada.

Clearing The Air On Canada’s Most Misunderstood Business Financing Solution



Information on factoring in Canada . How receivable financing differs from a bank borrowing solution and why funding receivables is becoming more of a proven successful strategy for the Canadian business owner




Key differences in banking and receivable financing have the ability to get the Canadian business owner and financial manager confused. Let's try and UN - confuse some of that information to provide some clarity as to why thousands of firms are gravitating to receivable factoring in Canada.

The core differences are in fact quite clear... how they are interpreted and what sort of solution you ultimately choose is where things get exciting! And those key difference - they arent as complex as you might thing. Simply speaking they are that the ability to borrow in this method of Canadian business finance revolves solely around the size and quality and value of your sales. Point number two is that this is not, we repeat ' not debt ' financing - so you are in effect just monetizing assets for cash flow. And that’s a good thing.

And our third difference - simply that the type of facility that you undertake when choose the strategy of finance via funding receivables is critical. That’s because your firm is not a borrower per se, you are a party to a 3 way business transaction involving your firm, your factoring partner and your client.

Quite frankly though it’s our recommendation to leave your client out of it! Is that possible? It absolutely is if you choose a confidential receivable financing facility that allows you to bill and collect your own A/R without notice to any other party - i.e. your client! And this can be easily accomplished if you have the right assistance and guidance from receivables professional.

We always point out to clients that although our focus today is discussing the financing of a business A/R the reality is that this type of facility can be nicely combined into a comprehensive working capital solution that bundles up your receivables, inventory, and even unencumbered equipment into one borrowing facility. That's supercharging your borrowing ability, and often delivers additional financing anywhere from 50 -100%, or more of cash flow power.

The general consensus is that receivable financing is expensive. While some may argue strongly that it is it is important to understand that the way the industry delivers pricing is not in the form of an interest rate per se. It’s in actuality a discounted amount based on receivables covered under the financing arrangement.

What's more important than rate in actuality, we feel is your ability to now borrow as much as you need to based on sales revenue, new contracts, large orders, etc . And if you're on top of your receivables and inventory turns all we are saying is that you're turning over more assets... more often, and that equates to... you guessed it... more profits.

Speak to a trusted, credible and experienced Canadian business financing advisor on what makes sense for your firm when it comes to a receivable financing program that best suits your needs. Finally... clarity!

7 PARK AVENUE FINANCIAL
CANADIAN RECEIVABLE FUNDING 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/factoring_receivable_financing_funding_receivables.html

How To Increase The Odds Of Successful Business Financing In Canada. Funding Your Company With Credit And Loan Solutions

Solving Business Credit Challenges In Canada

Information on business financing in Canada. Funding solutions for loan and asset monetization via commercial credit .


We're sticking our necks out a bit by saying that in general gambling is not a good thing but when it comes to business financing there are a lot of ways the business owner / financial manager can increase the odds

of funding their business with proper business credit and loan solutions.

It's a question of maximizing relationships and knowing at what point in time you need to seek debt or equity options. Most business owners would agree that finding the right solution is hard enough then comes the challenge of ensuring in a step by step basis that you can successfully complete that financing. In Canada some forms of business funding can be completed in hours ( example - leases for assets under 50k) while at the other end of the spectrum larger more complex solutions can take days, weeks, and unfortunately even months . Being unprepared for such timelines as is needed often leads to serious problems.

Knowing what those sources of financing are in Canada is half the battle - there typically is more than you think, and when you are focused on the right solution you have probably already increased your odds.

If we had to summarize in a fairly concise form the major sources of business financing, from a debt and asset monetization point of view (not equity) they would be as follows:

Receivable finance
Inventory Financing
Equipment Financing
Asset based lending
Traditional bank lines
Term Loans
Unsecured cash flow loans / securitization
Supply chain / Purchase order funding
Tax Credit Monetization

How then do you decide what fits when? We won’t weigh into the debate f whether there is too little or too much capital around these days, but we can guarantee the business owner/manager there somewhere out there is a solution that works for them. The business owner often focuses on Canadian chartered banks for many of the solutions we have noted above. We've done that for hundreds of years, so why change things, right?

The reality though is that many non bank commercial entities - i.e. leasing companies, non bank asset based lenders, niche players in PO finance and Tax Credits etc provide billions of dollars of financing and funding solutions for business everyday . How to get those solutions to trickle down into exactly what your business needs is the challenge.

If you feel that your total knowledge of business funding solutions is limited and have a real desire to expand the range of solutions available for your challenges seek out and speak to a trusted , credible and experienced Canadian business financing advisor who can assist you with your commercial credit and loan needs. Doing that increases ... the odds!

7 PARK AVENUE FINANCIAL
CANADIAN BUSINESS 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/business_financing_funding_credit_loan.html