Why The Sale Lease back Is Irreplaceable As A Finance Strategy: The Right Asset Buy Back Makes A Winning Leaseback Transaction

Holy Smokes!

Sale Leaseback Actually Works . Talk About Freeing Up Working Capital !

OVERVIEW – Information on the benefits of a sale lease back transaction . Asset buy back financing has significant benefits . What are the most important mechanics of a leaseback transaction









The sale lease back comes into consideration by Canadian business owners and financial managers for several reasons, and at several times. It's a text book case of freeing up valuable working and making absolute sense of the asset buy back. Let's dig in.

A leaseback transaction makes sense at certain key points in a company history. As firms struggle during revenue and profit challenges the owner/manager, prudent as he or she is, will look to the balance sheet for untapped capital. Those unencumbered (i.e. not financed) assets present a great opportunity to enhance cash flow and change the balance sheet optics.

It's never a perfect world but it certainly comes close to that when assets on your books are owned, have a useful life, and still have considerable value. In that case the planets have aligned! Your ability to then ' sell back ‘the asset to a finance partner can create in those circumstances both profit and cash flow. The ultimate win / win.

The actual sell price and valuation of the asset is key in a sale leaseback strategy. Additionally, dare we say it; your accountants must be comfortable with how the transaction will be recorded on balance sheet and income statement presentation.

It's always about ' cash being king' and cash proceeds received from the leaseback transaction strengthen your balance sheet. We're the last persons to get exciting about accounting in a sale lease back - suffice to say that it’s absolutely critical to ensure that your transaction has the proper impact on balance sheet, cash on hand, debt, and deprecation. Bottom line, talk to the experts.

We pointed out earlier that the win / win in a sale leaseback is a productive asset that you own and are still using. The buy back simply means that for a specific period of time you are transferring ownership to your lessor or lender.

One of the most critical aspects of preparing for your refinancing in this manner is understanding the probable necessary need for an appraisal This typically is done by a third party firm - suffice to say that most owners me meet and talk to in this type of financing have a strong opinion of the value of the asset . Unfortunately they are typically focusing on replacement cost, while a lessor or lender focuses on liquidation cost. Somewhere in the middle is probably the right answer!

You will also want to demonstrate to your lessor or lender (sometimes the leaseback transaction is structured as bridge loan or term debt - not a lease) there are no liens or encumbrances on your asset. In Canada this is quickly and economically established via a search under your provincial Personal Property Security Act.

Cash flow is a great benefit of a buy back financing. Be fore warned that you don't want to be viewed as executing a cash grab - be prepared to demonstrate the purposes of the capital/cash flow you receive from the financing. A sale leaseback is not desirable by any lender if a firm is in a death spiral.

Holy smokes, it appears to be true that asset refinancing is a solid working capital replenishment strategy. Seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you with your refinancing needs.


Stan Prokop - 7 Park Avenue Financial :

http://www.7parkavenuefinancial.com

Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 - Completed in excess of 90 Million $ of financing for Canadian corporations . Info /Contact :


7 Park Avenue Financial = Canadian Sale Leaseback And Bridge Loan Expertise











Stan Prokop









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Stan Prokop