Financing A Business Purchase In Canada . A Buyout Financing Loan .. Done Right !

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Management Buyouts & Latest News for December 2019 You Need to Know on Business Loan To Buy A Business

Financing a business purchase in Canada requires both a strategy doesn't have to be as hard as you think if you have the right information. What sometimes makes buyout financing or a loan strategy complicated is the good news; there are a variety of options available that make sense to you the purchaser, and the owner.



Business people and mangers looking to orchestrate a management buy out or business acquisition wants one thing: A solid simple strategy for both valuation and financing! The goal should be quite clear: agreeing on price and value, and then rising the right mix of debt finance and owner equity capital that suits the asset and capital base of the business going forward.



Of course valuing the business is often the first and largest challenge. That is complicated by the size of the firm, whether it’s a service or an asset / product based business, and whether the firm is a going concern, or heaven forbid, in dire straits.



What should be a good starting point in valuation - no surprise to us, its one of our favorite terms - ' CASH FLOW '! That means taking a look at what cash flow has been, and what it could be. That requires a solid handle on revenues and a proper forecast for those sales.



Asset valuation is a good step # 2. That naturally involves some method of appraisal of asset types such as equipment, real estate if there is any attached to the sale , vehicles, and those all important ' current assets ' , Receivables and Inventory .



We often find ourselves in the middle of a valuation issue when assisting clients with a business purchase - suffice to say there is an occasionally a huge difference in value as placed by the owner or the purchaser. We're often reminded of the old saying that best deal is often when both the purchaser and the seller both feel they didn’t get the best deal!



Taking a good hard look at how the seller presents financial statements is key to financing a business purchase successfully. Here's where the majority of clients we speak to need some good experienced assistance. Areas of focus are:



Collectability of receivables

Revenue recognition policy on sales, contracts etc

Lease obligations - (premises/equipment)

Fixed asset list value

One time losses i.e. why/what happened

Owner/management compensation



With reference to the last point, ' COMPENSATION' we see numerous cases where a hard look at current compensation can save thousands of dollars to the new owner/manager. And that includes the strategy of taking the previous owners kids and family members off the payroll!



If we had to summarize an all inclusive strategy in looking at the business financials we would say it involves simply a solid hard look at:



Debt

Liquidity

Profits

Assets



Easier said than done though, right? But a lot easier with some experienced assistance for an advisor, etc.

Useful Tools For Acquisition Financing

When it comes to actually financing the purchase this can be through bank term loans, asset based lending deals, unsecured cash flow loans, and even for smaller business purchases (under 350k) the Govt SBL loan.



Speak to a trusted, credible and experienced Canadian business financing advisor on assistance for financing a business purchase and a buyout financing loan / finance strategy... that works!







7 Park Avenue Financial :
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

http://www.7parkavenuefinancial.com

Click Here For 7 PARK AVENUE FINANCIAL website !



7 Park Avenue Financial provides value added financing consultation for small and medium sized businesses in the area of cash flow , working capital , and debt financing .



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

Financing A Business Purchase In Canada : Solving The Acquisition Loan Dilemma

How To Successfully Finance A Business Purchase In Canada

OVERVIEW – Information on financing a business purchase in Canada. Acquisition loan funding requires specific knowledge and expertise

Financing a business purchase in Canada presents the classic ' acquisition loan' dilemma. Acquiring your targeted company successfully requires some solid up front work and knowledge around valuation and finance. Where your funding comes from is key to a solid business purchase strategy. Let's dig in.

Of course smaller acquisitions can be accomplished potentially through your personal resources, up to and including collateralizing personal assets such as your home, etc. That is of course a potential slippery slope when it comes to mixing your business and personal finances. In essences the heart of the issue is the classic business conundrum - debt or equity... and how much debt!

But a large majority of clients we talk to are certainly very unclear around who might offer to finance your acquisition given current economic and business credit challenges.

It should go without mentioning (but we will anyway!) that a commercial lender or a bank will of course want to focus on your management and industry experience skills.

The Canada Govt Small Business loan is a solid vehicle to finance business purchases up to 1 Million dollars in value. This financing also works well for the franchise industry .It's important to note however that these loans only cover the financing of hard assets and equipment leaseholds. The ' SBL ' loan is not a line of credit of cash flow type loan. It's critical to understand that after your final acquisition finance loan is in place that other forms of finance should be considered including lines of credit, inventory finance, and potential growth financing.

A significant amount of time should be spent on understanding the receivables, inventory and equipment assets within your targeted acquisition. The turnover of A/R and inventory, coupled with the true value and use in fixed assets should be a key part of your initial investigation. These assets play a key role in any business financing, acquisition or otherwise.

In certain situations it might make sense for you the buyer and the seller to consider ' seller financing ' often called a ‘Vendor take back ' strategy. If this loan is properly documented and subordinated to your ' senior' lenders then that financing plays a key role in your overall finance package.

Actual financial solutions for your business purchase include:

Asset based loans

Unsecured cash flow loans

Business credit lines based on current assets - banks and non bank commercial finance companies offer this financing

Sale leaseback strategies

Govt Guaranteed Small Business Loans

If you're looking to solve the business purchase dilemma 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 acquisition 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

Financing A Business Purchase In Canada . Here’s Your Field Guide To Acquisition Loans

Looking For The Best Way To Finance The Purchase Of A Business


OVERVIEW – Information on finance a business purchase in Canada . What type of loans and asset monetization will make your deal work?



Financing a business purchase in Canada . Numerous situations occur that make buying a company a very attractive situation. You've become opportunistic in a positive manner. One question that comes up pretty quickly for the business owner/management is pretty straightforward: HOW ARE WE GOING TO FINANCE THE PURCHASE? The good news - both traditional and alternative strategies exist to successfully complete the deal. It’s our kind of ‘ FIELD GUIDE ‘!

Let's dig in.










No one denies that financing an existing or business purchase is not a cake walk , which by the was in fact an old English Dance . Not to belabor the point but we recently pointed out that in recent Canadian owner surveys over 60% of all owners/mgmt felt that any type of capital access was more than a job!

The size of your acquisition will in many ways determine what type of financing that you need and what's available. For business purchases on the smaller size, i.e. less than 350k the Government SBL loan from a qualified provider is a solid route to take. It finances hard assets and leaseholds, comes with excellent terms, and allows you to step into other financing that you need re working capital, etc.

In any transaction, of any size, it is important to the purchaser that he or she understands that a certain equity component be available to compliment the deal. That's a polite way of saying you can't finance a business purchase with 100% of other peoples money - aka OPM!

The amount of capital that you put in, in effect your ' risk money ' can often sway the deal, certainly in terms of finance. While that's more of an emotional comment hard reality kicks in when you understand that your equity/down payment component affects the leverage and debt to equity analysis that lenders focus on.

A great way to compliment any financing structure in the business purchase is the VTB, the infamous Vendor Take Back. It's a great deal for you the purchaser; the challenge is that the seller’s typical desire is to exit whole, and to complicate things, they prefer for tax and other reasons a share sale. Share sales are difficult to finance. Asset deals are preferable.

We see many firms in the SME sector that contemplate acquisitions focus on VC funding

or alternatively Private Equity. Unfortunately the majority of these efforts are wasted as these two methods of more sophisticated financing focus on larger deals with extremely sophisticated people that are look for a major, and we repeat major home run. Inevitably the majority of deals funded by Cdn VC's and PEG'S (private equity groups) are mostly in the tech sector.

Banks in Canada, the consummate ' Traditional Lenders ' will in fact finance a business purchase. But ensure you have a business plan, proven historical cash flows, reasonable owner equity, and leverage that is in tune with the banks appetite. Experts in the field say that only about 20% of all business acquisitions are financed successfully by Canadian banks directly.

Another tremendously successful way to finance a company acquisition is to consider Asset based lending. Here the total assets of the new entity can be monetized in a combination of term and revolving debt that maximizes cash flow and de-emphasizes the issue of leverage.

If you're looking for a mix of technical smarts, creativity, and access to numerous financing vehicles to complement a business purchase seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with this very specific type of financing challenge.



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 :

7 PARK AVENUE FINANCIAL = BUSINESS ACQUISITION FINANCING EXPERTISE




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

Financing A Business Purchase In Canada . A Buyout Financing Loan .. Done Right !

Canadian Business Financing – Management Buy Out Finance Info


Information on financing a business purchase in Canada . Buyout financing strategies and info for a management buyout loan or a business acquisition.



Financing a business purchase in Canada requires a strategy that doesn't have to be as hard as you think if you have the right information. What sometimes makes buyout financing or a loan strategy complicated is the good news; there are a variety of options available that make sense to you the purchaser, and the owner.

Business people and managers looking to orchestrate a management buy out or business acquisition want one thing: A solid simple strategy for both valuation and financing! The goal should be quite clear: agreeing on price and value, and then raising the right mix of debt finance and owner equity capital that suits the asset and capital base of the business going forward.

Of course valuing the business is often the first and largest challenge. That is complicated by the size of the firm, whether it’s a service or an asset / product based business, and whether the firm is a going concern, or heaven forbid, in dire straits.

What should be a good starting point in valuation - no surprise to us, its one of our favorite terms - ' CASH FLOW '! That means taking a look at what cash flow has been, and what it could be. That requires a solid handle on revenues and a proper forecast for those sales.

Asset valuation is a good step # 2. That naturally involves some method of appraisal of asset types such as equipment, real estate if there is any attached to the sale , vehicles, and those all important ' current assets ' , Receivables and Inventory .

We often find ourselves in the middle of a valuation issue when assisting clients with a business purchase - suffice to say there is an occasionally a huge difference in value as placed by the owner or the purchaser. We're often reminded of the old saying that best deal is often when both the purchaser and the seller both feel they didn’t get the best deal!

Taking a good hard look at how the seller presents financial statements is key to financing a business purchase successfully. Here's where the majority of clients we speak to need some good experienced assistance. Areas of focus are:

Collectability of receivables

Revenue recognition policy on sales, contracts etc

Lease obligations - (premises/equipment)

Fixed asset list value

One time losses i.e. why/what happened

Owner/management compensation


With reference to the last point, ' COMPENSATION' we see numerous cases where a hard look at current compensation can save thousands of dollars to the new owner/manager. And that includes the strategy of taking the previous owners kids and family members off the payroll!

If we had to summarize an all inclusive strategy in looking at the business financials we would say it involves simply a solid hard look at:

Debt
Liquidity
Profits
Assets

Easier said than done though, right? But a lot easier with some experienced assistance for an advisor, etc.

When it comes to actually financing the purchase this can be through bank term loans, asset based lending deals, unsecured cash flow loans, and even for smaller business purchases (under 350k) the Govt SBL loan.

Speak to a trusted, credible and experienced Canadian business financing advisor on assistance for financing a business purchase and a buyout financing loan / finance strategy... that works!

7 PARK AVENUE FINANCIAL
CANADIAN BUSINESS PURCHASE / MGMT. BUYOUT 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_buyout_financing_loan.html