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OVERVIEW – Information on acquisition financing in Canada. Know what finance sources are available to complete a business purchase or merger is critical to long term success
Naturally larger transactions in this area are handled by investment bankers or merchant banks - those are the deals we read about every day in the business papers - but what about the SME area - that huge part of the Canadian economy? Everyday a number of small and medium size businesses either complete or contemplate such transactions.
Generally when a business owner or management team contemplates a merger or acquisition there is a 'strategy 'behind the transaction. So why consider such a transaction?
Many companies simply realize that there is business logic and a risk component to diversifying out of their core businesses. We all know that 'diversification' is preached in all areas of financing, including our personal financial strategies. Companies who merge or acquire other firms for diversification realize they are lowering overall business risk.
Many times there are some classic synergies that can make a transaction in the 'M & A' environment very appealing. If a firm has a strong brand and they can add additional products to that brand then and grow both profits and sales that becomes a viable transaction. A smaller firm might have more of a 'reputation' than a 'brand' of course.
Does a business have to be doing well to be considered for a purchase or merger - Definitely not! In the current business and economic environment there are many undervalued or struggling companies. These businesses can be perhaps purchased at a bargain, and may in fact be worth many times their current valuation due to unique circumstances.
Acquisition financing solutions include:
Asset based loans
Term loans
Franchise Loans
Cash Flow Loans
Vendor Take Back Strategies
Sale Leasebacks
Canadian Govt Guaranteed Small Business Loan - aka 'The SBL'
The other reason companies consider a merger specifically is the ability to lower costs while at the same time increasing revenue. That is simply a scenario in which many costs can be lowered in the overhead and operating expense departments.
In some cases, say a manufacturing company, efficiencies can be realized. Unfortunately this sometimes comes at a 'human cost 'as downsizing is common in this area of mergers and acquisitions.
In some cases an acquisition can simply be current management buying the company from the current owners. This is typically called an LBO, or 'leveraged buyout '. Management usually puts in some new equity into the company and in many circumstances assets are refinanced at the same time.
In summary the merger and acquisition area is a unique area of business financing. Business owners must have a solid rationale, as well as a strategy, for contemplating these types of transactions. If you're looking for real world expertise in buying a business or merging seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your needs.
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 13 years - Completed in excess of 100 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 & Contact Details :
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Direct Line = 416 319 5769
Office = 905 829 2653
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
