Business Purchase Finance And Takeover Financing Solutions In Canada

Tweet

Information on buyout financing in Canada, including due diligence and financing strategies to complete a successful acquisition and takeover financing.

How To Get A Loan To Buy A Business In Canada

Business purchase finance in Canada often requires some, shall we say ' deft ' takeover financing strategies when an acquisition is made. This might often include a management buyout scenario. Let's look at some of the acknowledged ' smart ' ways to buy and finance to buy an existing business. Let's dig in.

There are often great rewards when an existing business is purchased properly with the right underpinning of finance and mgmt skill - the challenge is the right loan to buy an established business.

WHY ARE YOU CONSIDERING BUYING A BUSINESS OR A COMPANY BUYOUT?

If it's an add on ( the pros often call it a ' bolt-on ' ) to your current business its obviously a solid mechanism to grow your customer base and that might even mean acquiring a competitor or a vendor with whom you do business with. When executed properly its a solid method of gaining market share, acquiring skilled staff and an infrastructure and business model that is already established. In today's Canadian business environment there is a huge transfer of wealth happening as employees consider management buy outs, businesses consider mergers and acquisitions and family successions are in full force.




Since the turn of the millennium, we have experienced the first ever large-scale transfer of businesses in Canadian history. No matter if we are talking about management buyouts, mergers/acquisitions or family successions, we have a lot more experience today than we did 15 years ago.


At 7 Park Avenue Financial we find many business purchase leads come from business brokers, real estate agents or even online listings of businesses for sale. A business purchase might also be the acquisition of a new or existing franchise.

Financing Options when Acquiring a Business - Business Acquisition Loans In Canada

Different sources of capital might be used to fund a merger or the acquisition of a target company. The overall solutions are known as your final ' capital structure '.In many cases a combination of sources of funding will ultimately lead to a successful transaction, so it's all about the right ' mix ' at appropriate terms, rates, and structure.


Certainly not rare, but typically uncommon is to use your own personal or company cash reserves to purchase a business outright - that is possible but more often than not external financing will be needed when financing acquisitions.

While it is often not considered in the early stages of business financing it will often become apparent that some form of seller financing/vendor finance is required to close the gap in your financing package. This component of your financing has numerous advantages.

Advantages of Seller Finance / VTB

Confirms sellers commitment to the new owner - viewed as a positive by commercial lenders

Assists purchaser in closing the gap in total financing required

Terms of seller financing are often flexible and creative and are sometimes referred to as an ' earn-out '


BANK FINANCING


Industry experts agree that Canadian chartered bank financing is typically available for only higher quality credits. Many larger businesses cannot be financed without the involvement of a bank of a commercial loan firm. Canadian banks place a high emphasis on reasonable personal credit history of the purchaser, industry experience, personal guarantees, and various borrowing covenants and ratios around their financing in the transaction.



Two sources of ' bank financing ' that are outside of chartered bank commercial loans are the Government Of Canada Small Business Loan program for transactions under 1 Million dollars, as well as the government's crown corporation, committed to entrepreneurs - Business Development Corporation.

These two solutions should be explored but have some specific requirements around how their business purchases are instructed. A recommended strategy for these two solutions is to work with an experienced business advisor to determine if one or both of these two ' government ' solutions will fit your business purchase plan. As a general comment we can say that both of these 2 ways to acquire a firm are very focused on hard assets such as land, buildings, fixed assets, qualifying leasehold improvements, etc.

Highly leveraged deals can also be financed successfully if the underlying assets are strong and you can demonstrate the acquisition will be able to generate cash flow to support the higher leverage in the transaction. Pure cash loans, called ' mezzanine loans ' are very focused on the past, present and future cash flows of the business. It is here where a detailed BUSINESS PLAN and cash flow projection are absolutely required. Because ' mezz ' deals are unsecured by assets it's all about the cash flow!



VALUATION

We're told by ' experts' that the financial markets are ' imperfect ' to some extent, and that's probably the case with valuing and then buying a company. Business valuations always come down to an analysis of profits, and in the valuation process your goal is to attempt to ' normalize earnings' to reflect how the new entity will perform in the future. Business valuators use what are called ' multiples ' of key data points such as profits of sales and they are critical when you considering how to buy a business in Canada.




From a ' valuation ' perspective there are of course several time tested ways to value the target firm. Naturally there are different motives for buying a business that is already doing well. (Or a business that needs to be repaired! which often presents an even greater opportunity, and risk)Those motives might be synergies, economies, faster growth, less competition, etc. Because a lot of valuation strategies are subject to opinion we've often focused more on the ' assets' in the business. Good mgmt can usually reverse any losses, grow the business, etc

Example of Multiple Valuation

If a firm generates 400,000 cash flow each year it is not uncommon in many industries for the business to sell at a 3 or 4 times multiple of that cash flow, thereby providing a potential selling price of $1,600,000.00 as an example of the 4x multiple. That suggested selling price must now constitute a financing package of your cash deposit, senior debt, operating debt, and potential seller financing.


It's the assets in the business that will allow mgmt to increases earning power if the true value of the assets is understood. In many cases a proper appraisal of assets may well be required or simply the right thing to do.



The ' hard ' assets in the business are typically equipment, technology hardware, vehicles. We also mustn’t forget leasehold improvements as a part of any firms potential asset mix.



The ' current assets ' in the business will be providing the takeover with the liquidity and asset turnover it needs to be successful. Understanding the quality and turnover of accounts receivable and inventories are key to successful takeover financing.



Note also that almost always intangible assets and goodwill are normally not financeable in the SME (small to medium enterprise) marketplace. Many firms invest in R&D, and in those cases SR&ED tax credits can be part of the financing plan. All the analysis you do in the context of what we have discussed is knowns as ' going concern ' due diligence, and may often require a final adjustment to an offer price to buy the business. All the valuation and diligence you perform will steer you to how to raise capital to buy a business.



Getting proper financial statements from the target firm is key to any financing takeover success, again keeping in mind all the ' subjectivity' that comes with every item on the balance sheet ( except cash !).

How To Acquire A Company - Acquisition Financing 101

What strategies are used to finance business purchases and mgmt buyouts in Canada? They include:

Bank Loans - When Canadian chartered banks are the senior lender in your transaction they will always require a total charge on all the assets of the company including current assets such as a/r and inventory as well as the fixed assets, including real estate.



Govt Small Business Loans (new limit = $1,000,000.00) - This program is one of two ' government sources ' of capital to purchase a business. Terms are flexible and competitive and the personal guarantee is limited. The government does not lend money directly under the program, which is administered by INDUSTRY CANADA. Instead, it guarantees a large portion of the loan to the bank who lend directly to fund your acquisition. The main requirements of the program are down payment, good credit history and industry experience in the business you are targetting to buy. The ' SBL ' loan is often the best way to complete a small business acquisition .



Asset based loans- Asset based credit lines are a key source of business purchase financing. They monetize the assets of the business into a loan which can be both term and operating in structure. The revolving portion of these facilities provided day to day working capital and are paid down as sales are generated and clients pay. ABL facilities are often key to a successful business purchase financing.


Sale leasebacks - Sale leaseback financing can generate cash on already owned and unencumbered assets

ABL Business Credit lines - these lines of credit are practical to the day to day running of the business and can combine all the assets of the company into one borrowing facility that margins receivables, inventory and equipment, as well as real estate if applicable.

Tax Credit Financing - SR&ED Tax Credits Can Be Monetized To Secure Cash Flow

A/R financing - Receivable financing is a component of asset based lending . The ability to finance business receivables is key to unlocking day to day working capital needs. The day to day cash flow needs of the business can be addressed by numerous forms of invoice financing. Our recommended solution to clients of 7 Park Avenue Financial is Confidential Receivable Financing, allowing you to to bill and collect your own receivables unlike the typical ' factoring ' model of invoice discounting.


Invoice financing is a term for arrangements that allow you to finance your business invoice receivables. It is mostly used by small businesses to improve working capital and cash flow position by meeting short-term liquidity needs. The two most used solutions are invoice discounting and factoring.

Unsecured Cash Flow Loans - Mezzanine financing

Franchise loans - Many franchises in Canada are financed under the Government Small Business ' B I L ' loan as well as a combination of equipment financing and business lines of credit.

DUE DILIGENCE

It's important to properly and quickly identify the documents and information you require to properly assess the purchase price. A typical package will include several years of financial statements and interims if available, corporate tax returns, premises lease, equipment lists, aged payable and receivables, copies of bank statements and details surrounding current secured lenders and their agreements/collateral held / covenants, etc.

The entire due diligence process should be considered with the assistance of your lawyer, accountant, and business financing advisor. Their advice can be invaluable on the overall success of your purchase. In the overall financial diligence, you should consider any cost-cutting or productivity improvements you can make to grow cash flow and profits.



It should be recognized that many business purchases might also involve assuming some of the debt the company has in place, and that new ' operating facilities' such as business credit lines will be often needed when you're considering all your acquisition financing options and structures



In many cases a combo of financing methods may well be required to ensure the right amount of debt and equity and cash flow and working capital needs to be required by the business and

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in proper business purchase finance.



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 areas 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. He is an experienced

business financing consultant

.

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 financing 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.


Click here for the business finance track record of 7 Park Avenue Financial







Stan Prokop
7 Park Avenue Financial/Copyright/2020

Guide To Acquisition Financing Via Commercial Business Loans In Canada

Tweet

What Is Acquisition Financing?

You or your company has made the decision to either merge or acquire another business. What are some of the key issues in successfully completing acquisition financing and business loans for commercial entities in Canada?

In certain circumstances, your business purchase might involve the taking over of a business already in family hands, versus the other end of the spectrum which would be a purchase of a competitor. Business owners/entrepreneurs are always focused on growth. It's critical that you establish a method to target the company you may wish to acquire.

The ability to be proactive in your search as well as to have a formal strategy is key to successful acquisition finance. The ability to buy and finance a business successfully is a proven way to grow clients and leverage the capacity of your business model - that translates into building your brand.



Business owners, we speak to at 7 Park Avenue Financial tell us they have found firms to buy in different ways. That candidate to buy might come from your own network of personal and professional contact; in some cases business brokers who know the market well are a strong source of deal flow. Accountants and lawyers are also good referral sources. It's important to establish some exclusivity around a transaction you are considering from a competitive viewpoint. That can be established via non-disclosure agreements, a letter of intent, or an agreement of purchase and sale based on certain conditions, one of which might be ... financing!



In many cases, acquisitions do not work out if the purchaser strays from his or her chosen industry. Staying in the industry you know provides a greater chance of success based on your industry experience, given that you have the ability to run a business in your particular industry. Therefore picking a company you know in an industry you know well typically leads to a higher probability of success. Naturally investigating thoroughly the true financial and business position of the firm is critical in the decision to buy process.



While that increase in revenue and profits can come from organic growth it makes sense to achieve scale more quickly by utilizing a business purchase model. That economy of scale can often be a faster growth in sales and profits. It's not always the case but many experts believe that a larger business enjoys numerous advantages, including more beneficial relationships with suppliers/pricing, etc.

Certain types of your clientele might prefer dealing with a larger firm, as well of course the obvious ability for a larger business to attract higher-skilled employees. Naturally, a larger firm has more capability to expand into new markets and services.

A good place to start is simply to ensure you’ve got the right reasons or goals around a merger or acquisition. In some cases you wish to diversify your company, more often than not though it’s simply a case of growing, both sales and profits of course

Is the term ‘opportunistic a negative one? We certainly don’t think so when it comes to legitimate business dealings, so in many cases, you simply have come across a firm or competitor that in your opinion is undervalued. The bottom line, it’s a bargain and you're focused on exploiting either undervalued assets or companies that are not performing well in certain market conditions. Almost always ' price ' becomes a key discussion point so experts caution when to know you have reached limits or criteria that would negate the sale.




On the other hand, just because a company is up for sale doesn’t mean the process will be any easier. Negotiations can break down, for instance, if the two parties disagree on the price. It is essential to set certain criteria and limits and be willing to walk away from the deal if certain conditions that are important to you are not met. Bottom line? Poor pricing on a good company is often a ' bad acquisition'.

How Does Acquisition Financing Work

Don't forget also that acquisition financing is all about some even more common sense scenarios as identified above. Its often a classic opportunity to lower your operating costs as overheads in the new firm can be cut and other efficiencies can be extracted from the combined mix.

Sources of Financing In Canada  / Acquisition Financing Lenders

Typically, but not always a term loan is the main source of financing and comes from the appropriate term lender / senior lender on your transaction. This might be a Canadian chartered bank, or it may be a specialized commercial finance company in the traditional or alternative lending space.

In some transactions, your purchase may be completed by a cash flow loan based on historical and projected cash flows of the target company. There is always the ' equity component' of the transaction, and this amount varies based on the overall credit quality and size of the purchase.

  Cash Flow Financing:  In many cases, a business might not have the asset base from a viewpoint of    ' tangible assets '. It is, therefore, necessary to demonstrate that cash flows have the ability to service your loan as well as covering off other fixed expenses. Good cash flow will allow you to obtain the most flexible terms possible for closing your transaction.


Seller financing can be a key aspect of your transaction and will sometimes ' make or break ' your deal. This financing, also known as vendor take-back / ' VTB ' can play a key role in business purchase success, especially if the seller is motivated and willing to participate.

A common form of acquisition finance for well-established target firms is mezzanine financing. It helps out the need to avoid additional owner equity, and while more expensive, it is based solely on the quality of cash flow of the firm you are purchasing. Rates are typically higher due to the lack of fixed assets backing the loan.



What are the types of acquisitions? We can summarize those into three areas, and in some cases, the type of acquisition you make will impact directly the type of financing and commercial business loans that you achieve.

Factors That Make Your Transaction Successful

  Purchase prices are always dependant on reasonable valuations. There are numerous ways to value a company based on multiples of sales, profits, cash flows, book value of assets, etc. The cash flow generation we have already mentioned is key, as it will ensure a proper understanding of the company's ability to hand debt and expand via new planned capital expenditures.

It's important to know that your senior lender will also look at the quality of management based on business and industry experience.



Back to our three merger scenarios - they are as follows: friendly, hostile, and leveraged or management buyout. Many smaller companies are of course happy and content to be taken over; they fully realize the potential synergies. However, in certain cases it gets somewhat ' ugly ' in that the management or owners of the firm you intend to buy or acquire simply are opposed to the idea.

Leveraged and management buyouts tend to be asset driven. The downside of a leveraged or management buyout is that if done improperly a large amount of debt can leverage your new firm negatively. There are numerous creative ways to finance acquisition financing in Canada.

What Are The Ways To Finance An Acquisition?

Financing methods include asset based lending, subordinate or mezzanine debt (i.e. unsecured loans based on historical and future cash flows) as well as a private equity component.
Valuation is an important aspect in the area of acquisition financing. Your valuation will have a direct impact on the business loans you enter into to complete the purchase.

In evaluating a final valuation or purchase price you will want to look at things like general financial operating activities - i.e. the financials. But don’t forget also that other factors such as new assets that might be required, working capital needs, etc also will drive that final valuation number.

Generally speaking businesses with hard assets are easier to finance - Those assets typically have value and are excellent collateral for business acquisition loans. This is particularly true of asset based lenders if your transaction requires alternative financing vs. traditional bank finance solutions such as a term loan.

Buying a smaller company, or even buying and financing a franchise can often be easily achieved by using the government of Canada's " Canada Small Business Financing Program '. This is a very flexible term loan with a maximum borrow amount of 1 Million dollars. The potential drawback to the loan is that the main collateral must be equipment, leaseholds, or real estate so borrowers should consult an experienced loan advisor familiar with the Gov't Guaranteed Loan. Under the program, the Canadian government shares the risk of the loan with the lender.

INDUSTRY STATISTIC - During the last 10 years, the government of Canada has underwritten almost 10 Billion dollars of small business loans, for over 63,000 companies!

Target acquisitions must be for companies with less than 5 Million dollars in revenue. The program does not cover farms of non-profit types of companies. The government sponsor of the program is Industry Canada.

Challenges In Business Acquisition

Buying a business is all about planning and ensuring you have a strategy. As well as the risk of overpayment and of obtaining a poor valuation  the purchaser will want to ensure he or she has a strategy of efficiently integrating the business to achieve maximum shareholder benefit.

Issues you want to address may include understanding the perceived or real weaknesses of the company in its chosen market. A business might have a wide variety of products and services so strategies must be implemented around pricing and service offerings. Your goal is of course to be a leader in your field and markets.

Business Valuation

Valuing your acquisition target is always a key challenge, and there are several different ways to come up with an acceptable value. Key factors such as what industry you are in, as well as the size of the company and typical profit ranges, will come into play. Companies also recognize sales revenues and profits in different ways. It is absolutely critical to come up with and understand what ' normalized ' financials will look like at the time of takeover/acquisition. Typically buyers will want to focus on the value of the company as ' going concern '. Buying distressed or turnaround situations is a whole different kettle of fish!

So in normalizing the financials you must look carefully at the core revenues and the assets that produce those revenues. You should be strongly focused on future income potential. One time events or expenses should always be discounted. For larger transactions, companies might choose professional business valuators.



At 7 Park Avenue Financial we want to be your key source for buying or selling your business - selling your company will often require either a valuation or business plan or probably both. Our goal is to ensure you have a financing structure that will allow for the proper sale, financing and growth of the business. Together with your accountant, lawyer, tax specialist etc, we focus on a smooth transition to a completed purchase.



In summary, when contemplating acquisition financing look at issues such as the proper mix of debt and equity, cash flow analysis, and various areas of operational risk and reward. If you want financial alternatives in financing your acquisition consider talking to a trusted, credible and experienced Canadian business financing advisor who will assist you in this exciting area of Canadian business finance.







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 areas 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. He is an experienced

business financing consultant

.

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 financing 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
7 Park Avenue Financial/Copyright/2020

Financing A Business Purchase In Canada - Acquisition Loans

Tweet



How To Purchase a Business With The Right Financing

Buying A Business ? Ways To Finance A Business Acquisition

Buying a business in Canada often provides a large opportunity for success. While many owners and financial managers may prefer the strategy of organic growth for sales/revenue and profit potential the attractiveness of not having to start a business cannot be discounted.


But financing the business purchase capital, i.e. putting your transaction together is another story. There are numerous options available to the entrepreneur/business person when seeking a business acquisition loan, In some cases your transaction may be a management buyout or the focus on financing a takeover.

Acquisition Finance Solutions

Ways You Can Finance The Purchase Of A Business

Bank loans (Secured and unsecured) - In some cases the actual cash flows of the business can be used to finance the entire business purchase. This can be augmented with either a fixed asset/equipment loan as well as a revolving business credit line.

The importance of financing ongoing operations post the acquisition can't be overemphasized. If new owners are unable to finance through their reserves then options such as a business operating line, a non bank business credit line, or simply a/r invoice financing should be considered. We recommend Confidential Receivable Financing as the optimum method of financing sales when traditional bank credit can't do the job.


Franchise loans - The booming franchise industry, which supports a huge part of the economy has niche finance programs available to acquire both 'new' and 'existing' franchises. Corporate stores owned by the franchisor can be financed, as well as existing franchisees that have chosen to sell.

Tip: Find out why they are selling. Financing the purchase of an existing business is very common in the world of franchise financing.


Asset based Loans - These ' ABL ' loans cover the financing of assets as well as cash flow needs, including the often required credit line. These loans are ' non bank ' in nature and often provide higher ' loan to value ' financing when typically required loan and debt ratios don't work. The asset based lender in effect becomes the equivalent of your senior lender, in the same manner as would Canadian chartered banks.

Asset based lenders certainly help when the transaction makes sense to have a higher leverage based on the quality and size of the asset base. Main asset categories are receivables, inventory, equipment and real estate.

Most business owners wish to maximize the leverage and therefore enhance their return on investment but many times don't consider the dangers of over leveraging when it comes to debt.

While traditional Canadian bank financing might be the obvious or ' go to ' choice for many buyers it should be no surprise that they place significant emphasis on personal guarantees, potential outside collateral, and are usually focus on firms with very strong cash flows, balance sheets, etc. Naturally the Canadian banks can offer the lowest interest rates but financing an acquisition might often be a challenge. Also it should be known that banks aren't proponents of 100% financing - they demand, and desire the proverbial ' skin in the game '!

Government Small Business Loans - aka the ' Canada Small Business Loan '. This is the quintessential small business loan in Canada, One great way to acquire a business if your business fits some basic criteria - i.e. financing required for equipment and leaseholds. Acquisition loan rates, as well as other terms and conditions, are very favourable under the Canadian ' SBL ' program, not to be confused with the U.S. equivalent, the ' SBA ' program from which the Canadian program was modelled.  Crown corporations also can potentially assist in your purchase .

While not necessarily a 'creative' strategy, Government guaranteed business loans have solid 'traditional' type rates, no penalty for prepayment options, terms and structures, as well as.. wait for it ... a very limited personal guarantee! Finally, some help from Ottawa, but we digress....

It comes as a surprise to many people that the government does not lend money directly under our Canadian small business financing program - instead it charters the banks to fund the deals under the bank's guidelines. The government provides a guarantee to the banks. Many clients of 7 Park Avenue Financial advise us they have seen the banks interpret those guidelines as they saw fitting.


We can’t over-emphasize the importance of ensuring you understand the financial position of the business you are looking to purchase/acquire. If the seller's motivation is not 100% clear in initial negotiations it may well become clearer when the financial position of the company is understood.

In some cases owners may be willing to provide a ' VTB ' - aka the vendor take back. They may often make or break the financing as long as the seller is willing to take a 2nd position to your financing, and, more importantly, that your lenders don't view the VTB as more ' debt '. Negotiations around the actual amount of the vendor take-back will often dramatically change the nature of the selling price - upward or downward. Seller financing, that vendor participation we are talking about is powerful because it gives you the leverage to minimize owner equity if there are challenges in that area, and sellers are often willing to participate in some creative structuring of the ' take back '.


It removes some of the challenges of conventional financing, and sellers are many times 'motivated' to get the transaction done. There is no real stated percentage of what a typical seller finance percentage might look like, it varies with respect to the circumstances around your transaction so don't forget also that 'seller financing' can be a key part of any successful transaction.


'Goodwill' is difficult to finance part of any transaction, and the easiest financings in business acquisition tend to be ' asset ' oriented, not ' share sale ' focused when you are looking for a loan to buy a business in Canada. That concept of ' goodwill ' is a key part of understanding business loan requirements and what is required to often cobble a transaction together with different types of finance. Buyers should understand that in many cases a ' cobbling together ' of sorts, i.e using multiple sources of financing will often make a transaction work successfully. That is where external expertise can be of great assistance.



Buying and financing that business purchase via a well thought out and executed finance strategy is a solid way to become a Canadian entrepreneur. Speak to a trusted, credible, and experienced Canadian business financing advisor to kick start your business purchase.





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 areas 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