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Buying A Business ? Acquisition Financing A Pressing Problem ?
OVERVIEW - Acquisition financing is a key part of buying a business in Canada. The right type of loan funding and acquisition debt is critical to a successful purchase of a company / competitor
Business acquisition financing , done properly, plays a key role in helping to grow the business properly, and profitably. We're talking about the proper ' buy side' strategy. Let's dig in.
Safe to say that as a potential purchaser of a business you need to focus on the financing of your deal.
Why would you consider purchasing an existing business? Reasons vary, but are not limited to:
- Growing revenues faster
- Expanding into new markets or geographies
- To eliminate some existing costs and therefore increase profits
- capitalize on new technologies /products/clients
Various key parts of the existing balance sheet can play a vital role in financing your purchase properly. A solid example of this is to table the issue of a ' vendor take back / seller note ' that can alleviate the amount of capital you have to either put in... or borrow .
Naturally not all sellers are ' motivated ' to stay in the deal but a fair vendor take back note has 2 great advantages - reducing the amount you need to borrow , as well as enhancing some of the cash flow requirements that a lender might be concerned about . It might be opportune to mention to a seller that in some cases a higher sale price can be achieved with a VTB type deal.
In transactions we have worked on the existing accounts receivable must be addressed. Putting some... or all of the existing A/R into the deal may offfer certain advantages to you as a buyer.
So let's get to the ' nub ' of our issue - What financing strategies are in fact most common in acquiring a company. The most commonly used and almost always successful (if done properly!) include:
Govt Business Loans ( The SBL Guarantee Loan now has a limit of $1,000.000.00 ) Remember though that this type of loan only finances equipment and leaseholds, so another form of financing may well be required to complete your transaction.
Bank Term Loans/ Revolver facilities
Asset based loans - These loans finance all, or parts of receivables, inventory, equipment, as well as providing revolving credit lines for the ongoing business
Unsecured cash flow loans
Franchise Loans (Franchising is a huge part of the Canadian economy)
If you're focused on financing a business acquisition properly seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with buying and financing a business properly.
Stan Prokop - founder of 7 Park Avenue Financial –
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - Completed in excess of 100 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment fin, franchise finance and tax credit financing.
Info & Contact Details :
http://www.7parkavenuefinancial.com
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Office = 905 829 2653
Email = sprokop@7parkavenuefinancial.com
' Canadian Business Financing with the intelligent use of experience '
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.
Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.
Stan Prokop
