The Government Small Business Loan : Bypassing Business Finance Acquisition Challenges In Canada

A New Way To Buy An Existing Business In Canada ?

OVERVIEW – Information on successfully using the SBL government small business loan to finance a business acquisition purchase in Canada




Use a Government small business loan , aka, the ' SBL' to finance a business acquisition purchase in Canada? Absolutely, and by the way this is not something new, simply a tried and true way to purchase a business in Canada, including franchises. Let's dig in.

Small is always relative (we’ve found), so we're talking about purchasing a business with revenues under 5 Million dollars annual sales.

Why would an entrepreneur, or existing business owner purchase a business as opposed to starting one organically? One reason is pretty simple - risk is often minimized significantly if (and it's a big ' if ‘) the proper research, due diligence and financing is undertaken.

Pricing the cost of the acquisition :

There are, of course, some intangibles that come into your overall business acquisition decision - they include areas such as management depth and experience of owners, industry conditions, etc.

But at the end of the day a financing challenge always looms, and the Canadian Government Small Business Loan, via Industry Canada's program underwrites many thousands of business purchases every year. Those businesses also can include existing franchises in the booming Canadian franchise industry.

Business terms, rates and structures under the program are both attractive, and competitive. They include rates in the single digits, nominal personal guarantees, repayment without penalty, and long amortizations if in fact a longer repayment term is required.

Valuation is key in determining a financing structure that makes sense for the capital structure of the business. That capital structure is basically two components - debt and ownership equity. Purchasers should well be advised to consider a business financing advisor to help on valuation - as key issues around return on investment, cash flow, and asset appraisal are key to a solid and successful financing.

It's important to note that valuable business advice from you lawyer, accountant, or business broker can provide potentially valuable assistance.

When utilizing the SBL loan in the acquisition finance purchase decision it’s critical to know what the program in fact does not finance. Those seeking financing for intangibles such as franchise fees, advertising, etc will be disappointed - the program only finances two categories of assets - equipment and leaseholds. By the way, the programs maxes out at 350k, but other sources of financing can often complement a total finance solution approach.

Seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success if you're focused on a success business purchase financing experience.




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 Government Loan And Business Purchase Financing Expertise





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South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Office = 905 829 2653


Email = sprokop@7parkavenuefinancial.com


' Canadian Business Financing with the intelligent use of experience '

Stan Prokop

Acquisition Finance. The Heart Of The Matter When It Comes To Mergers Acquisitions Financing In Canada

Avoiding The Canadian Tragedy Of Poorly Executed Acquisition Financing


OVERVIEW – Information on acquisition finance in Canada . Mergers and Acquisitions financing .. done right !





Acquisition finance in Canada. Whether the business environment is turbulent or going smoothly savvy business owners and managers are always looking for successful mergers and acquisitions opportunities that... you guess it... require financing. Let's dig in.

In Canada both traditional and alternative financing solutions lend themselves to a business or merger opportunity, therefore posing the question - ' How is this opportunity to be financed to ensure success '?

In small to medium sized acquisitions a tremendous amount of creativity on a transaction can come from innovative methods of seller financing. Any form of seller financing obviously lowers the amount of external debt - traditional or alternative, that you are forced to take on.

Here on common challenge we see all the time is that the seller has serious tax ramifications depending on the type of sale that is in motion. Only two real types of sale exist by the way - ' ASSET ' or ' SHARE '. Share sales in Canada are typically very impossible to finance, in that private companies offer no real liquidity event for the financier. Naturally with public companies that’s a bit of a different story. The seller, unfortunately, is usually very ' tax conscious ' on the outcome of the deal, which many times makes the going difficult to close successfully and properly.

We point out also that when a motivated seller is open to some sort of Vendor Take Back scenario that also can become a potentially good source of income for the seller based on the interest charged on the VTB.

Smaller transactions in Canada require a commitment from the purchaser in the form of some sort of buyer equity, down payment, etc. Anywhere in the range of 10- 50% is required... and that's quite a range! Business owners who have to invest their own capital in a deal source those funds from personal funds, savings, investments, etc.

Less money down on any deal is the ultimate double edged sword on any acquisition finance deal. Leverage works for and against you, either propelling greater return on investment or significantly higher risk of failure based on too much debt - or the wrong debt. Talk about a real double edged sword! We point out also that lenders and other investors you may have lined up are generally ' impressed ' with an owner’s equity commitment to any deal. To paraphrase in the language of the people - you've got SKIN IN THE GAME!
While many clients we talk to in the Small business and SME sector think they can approach ' VC's' and Private Equity groups for assistance they rarely can meet the rigorous demands of those two types of external finance. Suffice to say you'll be giving up significant equity also, which in general is highly undesirable at a point when you haven’t realized the true financial benefits and returns of a good merger or acquisition.

In the small and SME sectors of business in Canada a great way to finance a business purchase is the government Small Business Loan - aka the ' SBL '. It offers tremendously attractive terms relative to what you are trying to accomplished, and allows you to retain tremendous upside re your projected financial performance.

Two final very typical ways to accomplish mergers acquisitions financing are to consider traditional bank financing and ABL (Asset based lending). If you can meet some basic cash flow coverage and debt to equity ratios you're a solid potential candidate for well priced acquisition finance. Asset based lenders will throw those ratios , generally speaking, out the window and simply focus on the assets you're acquiring and how they can be margined via term or operating solutions .

Avoid the tragedy of poorly executed financing when contemplating a merger of acquisition .Strive for a good grasp of acquisition financing basics, which can be sought via your accountant, lawyer, or a trusted, credible and respected Canadian business financing advisor with a track record.




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 10 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/acquisition-finance-mergers-acquisitions-financing.html







CONTACT:
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
















Stan Prokop

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7 Park Avenue Financial provides the financing you need for working capital, cash flow and business loan needs. Our reputation is based on 16+ years of trust and Canadian business financing expertise. All major Canadian banks have referred and continue to refer transactions to our firm for business finance solutions.

We strive to provide flexible alternative finance as well as traditional finance solutions to companies that are growing or experiencing cash flow challenges. We are experts in alternative finance solutions.

We focus on financing solutions that are available in the least amount of time possible and strive to provide the finance solution most applicable to your firm's needs. That might be acquisitions, growth, or restructuring and refinancing needs.

Our solutions include asset based credit facilities, purchase order financing, accounts receivable and factoring solutions, term loans, equipment leasing, and franchise finance as well as tax credit loans.

Referral sources for 7 Park Avenue Financial solutions come from bankers, consultants and advisors, brokers, accountants, law firms, and of course our clients!


Click here for the business finance track record of 7 Park Avenue Financial








Stan Prokop
7 Park Avenue Financial/Copyright/2020

Acquisition Finance Challenges ? How To Obtain Financing For Buying a Business

Need Some ‘ Finance Smarts ‘ in Business Acquisition ?

OVERVIEW – Information on acquisition finance in Canada . Techniques , tips and financial solutions on financing and buying a business in Canada .




No secret here... buying a business and financing that purchase can take you on a path that is a lot longer than you could wish for, with challenges all along the way. As a result any lead up you can get on acquisition finance will get you to your corporate ' goal line ' a lot faster. That’s where our expert advice, tips, and information come in today!

Our focus is mainly in the SME sector - the ' big boys ' of Bay Street seem to already have their millions in place to pay for expert advisors. ( Although if you read the financial pages every day as we do you certainly wonder about where some of that advice is coming from when you see the deals unravel and the scandals

unfold?!)


When you think of it the concept of purchasing a business or engineering a merger with a competitor is a bit of a journey (we’re hoping you won't view it as a ' bad trip ;!) And what does that journey consist of - well, we are assuming that you have done the work on identifying a target, valuing the target in some manner, and then negotiating your best offer that hopefully makes sense for all parties .

Have we forgotten anything? Oh yes, the financing! Here's where the challenges get a little steeper, as they relate to how much capital your own firm has or can put in the new business, as well as the overall financial condition of the business you are buying or merging into.

Canadian chartered banks tend to be the first ' go to ' when it comes to obtaining acquisition finance. The good news here is that there is no mystery around what’s required:

A solid business plan and cash flow projection

An industry / competitive overview

Management bios and personal financial statements - including your ability and agreement to sign on with your personal guarantee

Growth plans

Balance sheets and income statements that reflect acceptable debt/worth and cash flow ratios

If we had to sum up the entire ' bank journey ' in acquisition finance in the small to medium enterprise sector it would be that you need to focus on a banker who strongly supports your purchase and has the credibility with bank underwriters to both recommend and move your application forward.

Areas you should consistently focus on in the whole bank process:

Collateral
Cash flow
Sales
Operating ratios

Banks primarily lend on receivables, inventory and fixed assets and real estate. Your ability to manage and monitor those will be reviewed in detail.

When Canadian chartered bank financing just isn't going to work the goods news is that there are numerous other options to finance your acquisition of merger. They include:

The Government BIL Loan

Asset based lenders

Private equity /merchant bank groups

Any of those solutions can bring the proper mix of capital to your acquisition finance challenge. Financing of both short term and long term assets can in fact be accomplished in a number of manners, delivering the right leverage and working capital to make your buying that business successful.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your acquisition and merger 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/acquisition-finance-financing-buying-business.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