Business Purchase Financing Tips . End The Confusion On The Type Of Loan You Need To Buy A Company

Conventional and alternative solutions to business acquisition financing in Canada.

OVERVIEW – Information on business purchase financing in Canada . When you buy a business or competitor what type of loan and financial approach is required . Key issues to consider and focus on.



We've spoken of buying a business and the types of purchase financing and loan that will help you accomplish that goal.

If you are using a more traditional approach and utilizing a Canadian chartered bank to finance the purchase we highlighted key elements of a successful close - management depth and experience, a strong business plan, and solid financial projections.

Don't forget also that typically in a more traditional process, i.e. through a bank you will also be required to provide personal financials and the guarantees that come with that. At the end of the day you want to be viewed as an owner or management team that has a strategy and objective, and that you are going to truly focus on growth and profits.

That issue of personal guarantees always comes up in client discussions. While we can in a general sense that any business purchase in the SME sector in Canada will come with that personal guarantee of the owner we can also quite safely say that you have some negotiating power on that issue that you might not know you had.

Are there any alternatives in the whole issue of the personal guarantee? We can offer up that different banks and finance firms have different focuses on the personal guarantee, and the reality is that if you are dealing with an experienced credible banker that has credibility with the bank underwriters you definitely have someone on your side in this issue.

As a final comment you can focus on some restrictions to your guarantee commitment, and you can even have a long term objective with your banker of then focusing on a release of the guarantee sometime in the future.

When we get down to the actual finance structure of your transaction it's critical to focus on the key assets of the business - accounts receivable, inventory, fixed assets, and in some cases real estate. One key issue that you want to determine early on is the issue of ' concentration ‘... for example if a huge part of the business volume is coming from one or two customers. This ' concentration ' issue alone can sometimes make or break your financing on the deal.

Cash flow is the solution that will take you to the goal line if there are not enough assets to complete the financing. On the other hand if cash flow is light or poor the actual assets might be the one element that allows you to successfully complete a purchase.

At a time like this it's actually useful to have a short list of the key elements that a bank or finance firm will focus on when it comes to approving your transaction - In ' old school ' terms they will be character and management depth, cash flow, collateral, current financial condition, and growth plans.

If you can't, or choose not to finance the business purchase through a bank numerous other solutions are available. They include :

temporary bridge loans

An asset based loan or non-bank credit line

unsecured cash flow loans

receivable and inventory financing

Never forget you have the option to go ' ' conventional' or ‘alternative’.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with the right type of loan when you buy a firm and are seeking business purchase financing.

7 PARK AVENUE FINANCIAL
CANADIAN BUSINESS PURCHASE FINANCING AND LOAN 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 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/business-purchase-financing-buy-loan.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













Stan Prokop

Don’t Make These Mortal Sins When Buying And Financing A Business Purchase Acquisition. Buy A Company Or Competitor .. The Right Way!

Looking for Cutting Edge Advice on Buying And Financing A Business

Information on buying financing a business purchase acquisition in Canada . Buy a company , even a competitor, the right way!



More and more Canadian business owners and managers are looking toward executing and financing a business purchase acquisition. Buying a company, even a competitor has become one way to succeed on a growth strategy. But when you buy a firm are there some secrets to both not overpaying as well as some solid advice on how to finance the acquisition? We think there are.

Naturally the big guys execute acquisitions and mergers almost every day, all day. Valuations, currency, and business politics and competition play a huge role in determining the success of those deals, which we read about everyday.

But how about your transaction in the small to medium size (SME) sector in Canada. How do you access the cash and finance mechanisms that make a transaction work?

Many clients we speak to are looking to maximize on what they feel are ' undervalued' firms, in some cases the company you may be looking at might be in dire straits.


Naturally there are reasons why your acquisition target is undervalued, or in those dire straits we talk about. The reality is that more often than not it’s not just the price or value that you have agreed on, but the post sale cash flow and operations of the acquisition that will make or break your deal.

Where can things many times go wrong is simply when you don't spend enough time on the financials or the careful financing of the purchase. And boy is you committing a grave mortal sin when you overpay for a deal. The concept of overpaying and then not being able to execute on your overall strategy now puts you in... You guessed it... dire straits.

So what are they key areas of ' sinning ' when you buy a firm, from a financial and financing perspective. Naturally, as we have said, valuation is important, as well as a careful study or what you could call ' risk areas'.

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Financing the transaction must have you taking a hard look at profits, cash flow, and how your final balance sheet will look. It's very important to focus in on what cash flow the new company will generate. This is when your new ' economies of scale kick in.

Three other key areas of focus are total new sales growth, what assets are needed in the new combined entity, and how working capital will be financed. This includes growth in receivables, inventories, etc.

Don't get caught in other misconceptions - the concept of 'diversifying ' can sometimes turn into a fiasco. Diversifying into a completely different industry can bring both danger and financial risk. And don't think you can rely totally on the acquired management team to totally achieve your goals. That is up to you and your team!

There you have it, some pitfalls... to avoid when you buy a company through some sort of merger or acquisition process. Speak to a trusted, credible and experienced Canadian business financing advisor for tips and solutions to buying and financing a business in Canada.

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/financing_business_purchase_acquisition_buying_buy.html

Looking For Business Purchase Financing In Canada ?. Buying An Existing Company? Finance and Buy Tips .

Benefits And Tips On Canadian Acquisition Financing

Information on business purchase financing in Canada . Buying an existing company ? Tips on how to finance and buy a business.


Business purchase financing. When you or your firm has made the decision about buying an existing business in Canada you need some solid information around how to finance your transaction.

Why buy a business in the first place. Many clients we speak to are fortunate enough to have what we might call an ' inside track' on a company or business that would accept a favorable offer based on current situation.

The obvious benefits around our ability to buy a business that is established already is simply the fact that there’s a revenue stream, a client base, and assets and location that are already in place . That certainly beats a start up scenario and all the work and challenges that go with that.

Also, business purchase financing also has the ability to structure a financing deal with the owner remaining in a subordinate position via a VTB, i.e. a vendor take back. Naturally the skills and expertise of the owner and current management team might also have a significant value to your own efforts to grow the business, at lease for an interim period.

Is it easier to arrange funding for an established business versus an existing business? There's never a clear answer to that one, but many people do believe your chances of success are much higher when you buy an established concern; and if you're a lender looking at a transaction such as this it also means you're more positive than negative, wouldn't one think?

Naturally cash flows and profits of an existing business are positive in the context that you can demonstrate immediate cash flows and profits to repay loan financing. In some cases you might be purchasing a franchise and you will need the support of the franchisor to make that acquisition. Once again the ' branding ' and ' reputation' around that franchise is clearly positive as opposed to negative.

Valuation is a challenge when it comes to both purchase and financing when buying a business. A higher valuation will mean you might have to finance a goodwill component, which is difficult in an asset based transaction. On the other side of the coin we meet clients who are interested in buying a distressed business that has been trending down - valuation is cheap and they believe they can engineer a turnaround. Easier said than done sometimes.

Valuations on the business can be supplied by the owner, or you can arrange your own through a qualified advisor or appraiser. That's particularly important when it comes to an asset based business.

Key issues to consider in the valuation and financing of the business are quality of the financials, revenue trends, cash flow generation - i.e. does the business use cash or throw off cash? ( The latter is better!) You or your accountant and advisor need to ' normalize ' the financials, making the assumptions on how the business costs will look after you take ownership.

In Canada businesses can be financed with term loans, asset based lending, franchise financing if applicable, and even the Government Small Business Loan if its a smaller transaction under 350K.

Speak to a trusted, credible and experienced Canadian business financing advisor on how to properly structure and complete buying a business in Canada.

7 PARK AVENUE FINANCIAL
CANADIAN BUSINESS PURCHASE 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_purchase_financing_buying_existing_buy.html

Want To Buy A Franchise? Need A Loan ? Here’s Your GPS to Loans for Franchises in Canada!

A Roadmap To Successful Canadian Financing For Franchises


Information on the proper method of obtaining a franchise loan in Canada . Loans for franchises are significantly different than regular business loans. Use this information as a roadmap and guide to franchising success when you buy a franchised business.





So... you want to buy a franchise. Why then our analogy to a GPS system? Simply because that type of gadget these days provides you with a road map for not getting lost, and from our perspective getting a franchise loan is the last place where you want to be lost and not knowing your position . Make sense? We think so.

Loans for franchises in Canada can be a combination of an exhilarating process and a frustrating one - the former referring to being approved and the latter referencing our conversations with clients who have been frustrated by the process.

Let share some solid ' road map' type information on ensuring you minimize the time and risk when you buy a franchise and consider a franchise loan. The reality is that in many ways we could make a case that ownership via a franchise business is actually significantly less risky that other types of businesses which are viewed as 'start up ' in nature.

The challenge becomes knowing which institutions and programs will make your franchise investment happen. It's a common fact that a large majority of business funding requests by entrepreneurs fail simply because they are poorly presented. So knowing how you can easily prequalify yourself, and putting together a basic package that presents yourself and your new business in the best manner is well, worth its weight in ' money ‘!.

In Canada franchises can be financed from a turnkey point of view, or in some cases you may wish to acquire a franchise from an existing franchisee in the system you are looking at. It's ironic, but one of the lesser know but larger challenges in the Canadian landscape is the ability of current franchisee's to add additional units to their first location .

So is it possible to prequalify yourself? We assure clients that a large part of that process can be done by themselves. They must demonstrate some level of either specific industry or general business experience, while also showing the lender that they have run their personal lives from a financial perspective in a manner that reflects solid stewardship. That means having a solid credit bureau score (650 tends to be the magic number) and it certainly helps to have assets such as a home, savings, etc.

We don’t suggest or recommend to clients that they leverage all or a very large amount of assets when considering loans for franchises. But certainly anywhere from 10-50% of a purchase price typically needs to be covered off by the franchisee. That’s your ' owner equity '.

You establish the amount of financing you need by putting together a fundamental business plan around your opening balance sheet. That will reflect your own cash investment, funds you have spent already, and what is needed to get you to a turnkey grand opening! That typically is equipment, leaseholds, perhaps real estate, etc.

In Canada franchise loan financing is generally done via an independent commercial finance company or the bank. But when we say the bank we are actually referring to the CSBF program which has provided thousands of franchise loans at terms typically enjoyed by established businesses.

So is there a guaranteed GPS road map to a business franchise loan. Never 100% but you can get very close to that by pre qualifying yourself realistically, putting together a solid package, and ensuring you know who finances loans for franchises in Canada. Speak to a trusted, credible and experienced Canadian business financing advisor for access to your road map for financing success.



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/franchise_loan_loans_for_franchises_buy.html