Do You Know How To Raise Cash For Financing A Business Purchase Acquisition?

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Hitting a Bull’s Eye In Canadian business acquisition financing!


Information on raising cash and debt financing for your business purchase acquisition in Canada

When financing a business purchase acquisition it kind of comes, fortunately or otherwise, to the fact that ' size counts '! . So the cash you need will directly relate to the size of the business you are financing, as well as the asset quality.

Naturally how the company you are purchasing and raising cash for is doing play a key element, as often less cash is required and the focus is on financing remaining assets. So a solid rule of thumb to keep in mind is simply that the amount of cash and ' finance power ' you need is very directly related to your targets situation on profitability. In other words a lot less real cash is required if a company is not profitable or barely breaking even. That certainly makes the job easier, right?

In talking to clients about financing a business purchase we often feel they are focusing solely on the purchase, and not on the on going capital and cash flow needs of your newly acquired business.

We also have to consider the fact that raising cash for a business might often be more feasible if you have a strategic partner or other equity investor. That unfortunately will dilute your equity position but might be realistically the best course of action. And it does certainly allow you to purchase and fund a business with less ' monetary' contribution to the deal.

In the case of larger transactions Canadian business people might well look to a private equity partner in the deal. Their assistance in helping you complete an equity investment, as well as their experience in any specific industry is of course a valuable consideration. And to sum up the whole issue of getting either a strategic or operating partner or private equity group we can simply say that often times this might well add credibility and realism to your offer in the eyes of the seller.


Bank financing in Canada is available to finance business acquisitions. You or your Canadian business financing partner needs to address the following issues at this point:

A concise overview of how you will run the business - i.e. management depth, experience, etc

You need to ensure the industry your business is in is ' in favor ' when it comes to a bank appetite

Your business plan and projections have to be realistic relative to cash and working capital resources re operations and growth

In a perfect world - and we know it's not! You want to be in a position to demonstrate sales growth, profits, and a balance sheet that hopefully won’t have a debt/ equity ratio of 3:1 as an example. And your assets such as inventory and receivables should demonstrate borrowing power quality.

Other ways to finance your business purchase include asset based lending, bridge loans, use of sale leasebacks, and even the government SBL loan if the business has under 5 Million in revenue.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor when it comes to a capital raise for a business purchase acquisition in Canada.

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

Email = sprokop@7parkavenuefinancial.com


Click here for 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 100 Million $ of financing for Canadian corporations .



' Canadian Business Financing With The Intelligent Use Of Experience '

ABOUT THE AUTHOR
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

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

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Conventional and alternative solutions to business acquisition financing in Canada.


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, and asset based loan, unsecured cash flow loans, and receivable and inventory financing firms. 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 :
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

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 100 Million $ of financing for Canadian corporations .

' Canadian Business Financing With The Intelligent Use Of Experience '

ABOUT THE AUTHOR
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

Business Purchase Financing In Canada : Winning Tactics To Buy A Company Successfully

Smart Strategies To Finance A Business Purchase In Canada

OVERVIEW – Information on business purchase financing in Canada. Numerous options to buy and finance a company are available to owner/entrepreneurs

Business purchase financing in Canada
requires ' smart' strategies to complete a transaction that make sense for both the buyer and the seller. In fact there are some proven winning tactics to effectively complete acquiring a business - even your competitor! Let's dig in.

Whether purchasers like it or not the amount and type of financing capital you can raise will often have a dramatic effect on the size of company you are looking to purchase, or merge with. We're talking of course of a combination of both debt and owner equity.

Of course valuation methods differ on that ultimate purchase price, and valuing a business from both the sellers and buyers perspective is an entire conversation for another day - suffice to say that good deals are completed when a fair purchase price is agreed upon.

If one expectation is clear in business purchase finance it's that there must be a reasonable amount of both debt and owner equity. As important is the fact that different types of finance will require more owner equity. When using bank financing it is safe to assume a good level of owner equity/down payment will arise.

When buying a company that has profit and financial challenges the purchase price will more often than not be very attractive - the challenge being ' the turnaround required.

In many cases sellers are willing to participate in the sale of the business to you. That's known as the 'VTB ' - the vendor take back and can be a strategic part of your overall financing plan.

Caveat Emptor - while the majority of banks or commercial finance companies view vendor take backs as quasi equity, in some cases this might simply be viewed as another form of debt - therefore subject to all those same capital/ debt equity issues .







What are the key elements of positioning your purchase of a company for a commercial finance company or bank? They include:

A solid business plan and operating strategy

A clear overview of the industry (which hopefully is not ' out of favor ' currently)

Ownership/mgmt experience

A financing plan for sales/ growth and profits

What then are the key mechanisms used to finance a business purchase? Note also that some of the finance strategies listed below is often a combination of financings depending upon how complex or large your transaction is -

Business Purchase Finance Solutions:

Canadian chartered bank term loans

Mezzanine financing / Cash Flow Loans

Asset based term loans or non bank business credit lines

Sale leasebacks / Equipment financing

Govt of Canada Guaranteed Small Business Loans

If you're looking to buy a company and want to ensure you've got a winning finance strategy in place 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 needs.


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 - 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 :

http://www.7parkavenuefinancial.com

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


Email = sprokop@7parkavenuefinancial.com

' Canadian Business Financing with the intelligent use of experience '

ABOUT THE AUTHOR
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

Buying a Company In Canada : Business Purchase Finance Problems Are Solved Like This

Can Buying A Company In Canada Be Easily Done ? Acquisition Financing 101

OVERVIEW – Information on buying a company in Canada. These business purchase finance solutions , tips and tricks will make your acquisition successful

Buying a company in Canada may be an easier process than you might think... if you're aware of certain financing and valuation pitfalls that many purchasors either don't know about, or worse, choose to ignore. Let's dig in.

In many cases it safe to say that that amount borrowed to fund the purchase will often dictate different levels of complexity. Many businesses in Canada that are under the 5 Million dollar range in annual revenue can actually be accomplished with the government ' SBL ' loan.

Here though the loan cap is $ 350,000.00 so that again dictates that in some cases additional financing strategies on top of that loan might be required. In our experience many franchises are well suited to purchase under that 350k cap. And by the way the general terms and conditions of that loan are very competitive and attractive.

If you are borrowing from a bank, a commercial finance company, or even with some level of seller participation ( aka ' the vendor take back ' ) there are some solid ' top up ' financing solutions available . They include equipment financing, cash flow loans - secured and unsecured, working capital term loan debt, asset based credit lines, and even monetization’s of SR&ED research credits if in fact they exist on your transaction.

While many prospective business purchasers focus on taking on debt or monetizing assets of the business in question they often overlook the fact that a significant amount of cash flow

can be generated by better management of company assets. You would be surprised at how improving A/R turnover, turning inventory faster and managing payables better will improve cash flow.

When buying a business study ratios of DSO, Inventory turns, and a/p days outstanding. They will give you a strong sense of where there is room for improvement. Over all this new found cash flow will limit some of the ongoing working capital you need.

Valuing the fixed assets will also maximize financing potential, and this is typically done via the services of a third party appraiser selected by yourself, or more commonly the lender.

No issue in Canadian business financing could generate more discussion with your lender than the dreaded ' Personal Guarantee '.

While every situation will differ it's safe to say these are negotiable to a certain extent if the overall optics of your purchase are positive.

Purchaser and seller may well wish to consider a vendor take back of some sorts. While sellers can often demand a higher purchase price in this area buyers have the comfort of knowing they have secured some additional ' financing ' with someone who is very incented for you to succeed!

The absolute fundamentals of buying a company and arranging business purchase finance include having a solid business plan, good cash flow projections ( conservative is better!) and ensuring that in some manner you as a buyer have some personal equity in the transaction . It's the proverbial ' skin in the game'.

When it comes to that cash flow carefully consider realistic revenue expectations and your ability to collect client receivables in a timely manner. Building in the need for future asset purchases is critical also.

Both buyers and sellers can benefit from the use of an outside advisor when it comes to actual valuation of the business. Tax issues around asset vs. share financing, earn outs, goodwill, etc can be complex.

Would a co-pilot help?

Consider seeking out and speaking to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success
who can assist you in making more complex financing issues easy to understand.. and accessible.





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 BUSINESS PURCHAES FINANCE EXPERTISE





Have A Question /Comment On Our Blog Or Canadian Business Financing Alternatives ?
CONTACT:

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



Email = sprokop@7parkavenuefinancial.com


' Canadian Business Financing With The Intelligent Use Of Experience '

Stan Prokop