Lawyers Guns And Money . Acquisition And Merger Financing And Business Lending In Canada

Buying and Financing A Business In Canada


Information on business lending strategies and solutions for merger and acquisition financing




Acquisition financing in Canada. Lawyers, Guns and Money?! Do we really need all three of those? Of course not, in fact Money and probably some measure of ' lawyers' should do.

Warren Zevon's rock classic of the same name ‘... send lawyers guns and money ‘didnt include unfortunately any merger busines lending advice for business owners and managers in the SME sector who contemplate properly completing an M&A transaction.

Let's examine some key strategies and tips around your consideration of an acquisition financing or merger. There are different reasons for buying a business, and at the same time numerous financial strategies exist to achieve the final goal. Proper merger and acquisition financing compliments the final exit strategy of both the founders of the firm being acquired, as well as for the owners of the newly created firm .

Today we're talking mostly about what's known as the ' forward merger' wherein your company survives by acquiring the other.

To say you need a team of experts in a successful transaction is a major understatement. That team will allow you to properly position both companies and ensuring proper valuations are in place prior to and post M&A.

Its human nature for buyers to bid low and sellers to ask high, so solid analysis of current financing structures is critical.

Leverage is a key concept in pre merger and acquisition financing analysis. And we're talking two kinds of leverage - both financial and operating g. Transactions often don’t make sense if the financial leverage is more than 3:1 from a debt to equity perspective, and the operating leverage analysis includes fixed and variable cost analysis.

The amount of leverage you will ultimately have will often determine what type of financing and what lender will successfully complete your deal.

The concept of ' friendly debt ‘, which can be a vendor take back is a great place to focus , and transaction that include a healthy ' VTB' are generally viewed as favorable . Of course if your lender for the acquisition financing considers the VTB as pure debt that's a different story.

But, as we said, generally speaking a solid VTB component of your transaction leads to a good deal. It's a great way of buying a business, especially if you view the financing of the transaction as a challenge. The reality is that a solid VTV plus the potential for profit in a business has the makings of a solid M&A deal. Quite often of course the VTB structure is much more favorable than traditional bank or commercial finance firm debt, and it gives all parties a reason to succeed, even the seller holding the VTB.

A solid down payment of equity in your own current business, proper M&A financing, and a solid VTB from the current owner or owners simply make for a probably successful acquisition financing win.

There are numerous financial considerations and analysis required for a solid M&A deal that represents a win/ win. They include our previously mentioned debt to equity, as well as other concepts such as cash flow servicing.

In the end result the amount of debt you take on in a merger via a business lending vehicle can make your firm more conservative in nature as you're focused more on servicing the debt than focusing on new opportunities

Talk about some complex scenario - identifying the opportunity, value and pricing your target, and, oh yes financing via a proper business lending strategy. So, as our friend Warren Zevon sang ' send ' lawyers, guns and money ‘, but our recommendation is to focus on # 3 - Money for your merger and acquisition financing in Canada.
Speak to a trusted, credible and experienced Canadian business financing advisor for assistance on your SME M&A financing needs




7 PARK AVENUE FINANCIAL
IS AN EXPERT IN ACQUISITION FINANCING



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/merger_acquisition_financing_business_lending.html

Police Arrest Batman! Franchise Loans In Canada @ 0% Interest . Financing Your Franchising Cost - Realistically!

Canadian Franchise Finance



Information on franchise loans in Canada . How do franchisees realistically approach the franchising cost of financing their entrepreneurial purchase .



Franchise Loans in Canada. At 0% financing? Financing franchising cost at that rate would be great? Hardly realistic, right? And we won't even weigh in on why the police would even consider arresting a great superhero such as Batman who protects the city from evil.

So if those two things don't exist, what is in fact the real scoop on franchisee finance in Canada? Let's examine some more realistic issues around the purchase of your business, either existing, or new, in the franchise industry.

A common misconception exists that potentially you might be able to in fact finance 100% of your purchase via some sort of loan vehicle. Unless you've got some special relationship with a lender in Canada that we're not aware of that’s clearly not going to happen.

Typically anywhere from 10-40% of a final purchase price has to be financed by you the owner. And while all of these funds might not necessarily be a permanent investment, they are still needed to demonstrate some working capital conditions that must be met by traditional financial loan criteria. The financial term for this is of course the proverbial ' skin in the game '!

Can you purchase a franchise without a solid personal credit rating and net worth? The short answer, in general, is ' NO '. Whether you're financing franchise cost of purchasing any other business in another industry the reality is that a solid emphasis is based on the way you have managed your personal financial life which lenders use as a barometer as to how you'll manage your business affairs . So credit score, beware!

Is collateral required when financing a franchise? A general comment we can make is that it is not. Typically external collateral is not really a part of any franchise finance decision. Many clients we speak to feel they might have to put their home at risk, and we can commiserate with that thought, but if your franchise is ' PROPERLY ' financed then typically just your owner equity component is required.

Can you get away with getting approved for franchise loans without a business plan? We certainly say ' no you can't ' to that one, and in fact if you're smart the business plan will be a great measurement stick for how you understand the financials around your business, and a great way to ensure you reach some of those sales, cash flow, and profit metrics down the road ,

A business plan should not be as daunting a task as you might think just because you might not have experience in this area. Essentially it's a recap of your business experience, the franchisor and industry you're going to participate in, as well as a financial plan around sales, profits and cash flow and loan repayment. Not that difficult, right?

So, superhero arrests by the cops? 0% non subsidized financing? Doubtful. But if you want to get some realistic financing advice around franchise loans and franchising cost financing in Canada speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your entrepreneurial purchase.






7 Park Avenue Financial is an Expert in Canadian Franchising Cost Financing



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_loans_franchising_cost_financing.html

Need Help Identifying Commercial Business Loans And Financing In Canada ? Sources Of Finance For Canadian Business

Canadian Business Financing – When .. Now… Maybe


Information on identifying business financing sources in Canada . What you need to know regarding commercial loans and finance opportunities for your company




When, and how. Do you have a handle on what business financing you need when seeking finance and commercial loans in Canada? Let's review some of those timing issues, as well as sources and solutions.



Plan A (which often quickly becomes PLAN B) for many business owners and financial managers in Canada is to highlight a Canadian chartered bank as their main option. And truth be told, commercial banking is quite competitive these days; especially from a perspective of rates, etc. (Approval is a different story!)

It's a hard core reality that you in fact, due to the above competitiveness, as well as your firms own credit quality could in fact get a better deal , structure , and rate simply by ... ' changing banks '. Is that recommended? Certainly not always, more so when it comes to evaluating the cost of a relationship.

Are there alternatives to Canadian chartered banks when it comes to commercial loans and financing in Canada? There sure are - they include pension funds, insurance companies, and commercial independent finance companies. The latter group consists of specialized small firms, niche firms, and larger Canadian and international finance corporations.

Clients ask us, when they are looking to finance externally what they need to look out for. It's a question of looking at what type of firm and financing vehicle is in fact best suited for your needs. And the factors that determine that?

They include:

Term of amortization of your financing

Why you are financing

Cost

The upside / downside of that type of finance

Short term business financing transactions in Canada tend to be 1- 3 years in length. We're often approached for very short term needs and these are difficult, but not impossible to accomplish.

Naturally longer term financing tend to be anywhere from years onward. When you consider the period or term of the loan the business owner focuses on the overall financial position of the company. The lender however focuses pretty well solely on risk and collateral.

Businesses in Canada finance for many reasons. They include expansion and growth, new markets, probably the best advice we can give a business owner, and it’s certainly the view of many lenders, that areas such as product development and working capital should be financed internally through profits and operating cash flow.

If you can’t generate enough cash internally probably one of two situations exists - your profit model is (hopefully temporarily) broken or you can't really afford the financing you think you need. Our point is simply that it’s not always external debt that is the fix to a problem . Physician, heal thyself comes to mind!

In Canada sources of financing include securitization of assets, export finance, sale leaseback of assets, working capital term loans, and monetization of assets via bank credit facilities; asset based lending agreements, and monetization of assets such as receivables or inventory on their own.

If you need assistance in identifying the why and how of business financing and commercial loans in Canada speak to a trusted, credible and experienced Canadian business financing advisor.




7 PARK AVENUE FINANCIAL
Is An Expert In Business Financing
And Commercial Loans




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_financing_commercial_loans_canada_finance.html

What’s The Difference Between Not Having A Cash Flow Financing And Having A Business Finance Management Strategy?

Effective Working Capital and Cash Flow Solutions and Management

Information on business finance and cash flow financing management . Implications of a losing strategy.

Cash flow financing. The potential failure of your business... that’s most likely the final result of not have a business finance cash flow strategy with appropriate solutions and financing in place .

So what are some of those solutions; but even more importantly can you recognize when cash flow is decelerating, and can you accelerate it via internal and external means. That's the conundrum facing Canadian business owners and financial managers today.

We're often surprised , even shocked when we meet clients to have a great business and entrepreneurial sense, have great services and products, yet at the same time have no real focus on cash management and working capital solutions.

They seem to have a solid plan for their company's future, but no real plan on the cash flow. So, yes, they are growing, but also heading into cash flow crisis 101!

Hindsight is great in business, however when the business financing challenges get to big in the present it’s because they quite often weren’t addressed, right about now.

In general the SME (small to medium enterprise) in Canada fails to recognize that growth is bad. Of course it's great also, but its ' bad ' only because you're now using and requiring more cash than you ever did. So all of a sudden that need for working capital, coupled with slower receivables or bulging inventories are moving you to crisis mode.

Naturally your failure to address these issues then enters you into a world where you're potentially unable to pay existing lenders, and the last thing you’re
able to focus on is expansion capital. So being smart on growth and dumb on cash flow and working capital is... you guessed it, not a good thing.

Cash comes into your company via product and service sales and the accounts receivable that result. The outflows are as tough to manage - they include salaries, a/p, fixed asset additions, lease and loan payments, etc.

The key factors that result in a cash flow crisis are numerous - they might include overextending sales to poor credit risks, slow collections with no key focus on a/r management , financial losses to due low or negative margins, or serious declines in sales .

Can the Canadian business owner accelerate cash? Yes, he or she can. Along with solutions such as receivable financing, asset based lines of credit, bank credit facilities, and inventory financing and tax credit monetization you can monetize your balance sheet without additional debt.

Even smarter solutions exist within your company walls, they include managing A/R better, invoicing promptly, slowing a/p to maximum extent possible without offending key suppliers, or encouraging pre payment on larger orders or contracts.

You can also set up very simple data points to measure your progress or problem areas. That includes monitoring cash to sales ratios, cash on hand to ending receivables, etc

So, growth? We're all or it. Just remember though that hand in hand should come a solid cash flow financing and business finance management strategy that you can work internally and externally.

Speak to a trusted, credible and experienced Canadian business financing advisor for solutions to your firms finance needs.



7 Park Avenue Financial
Canadian Business 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/cash_flow_financing_business_finance_management.html

Leasing Rates . What’s The Trick To Getting Best Lease Pricing In Equipment Finance In Canada?

CANADIAN BUSINESS FINANCING
WITH THE INTELLIGENT USE OF EXPERIENCE!


STAN PROKOP
7 PARK AVENUE FINANCIAL



Canadian Lease Finance Pricing – Rocket Science Degree Not Required!



Information on understanding leasing rates and equipment lease pricing for asset finance in Canada .





Leasing rates for equipment lease pricing and finance in Canada. Abracadabra! We wish it were as easy as that one word magic phrase to get the best rate for your equipment finance transaction!

But in reality its not that hard to ensure you have the best financing rates if you understand the basic underpinnings of a lease price and how certain obvious ( and not so obvious ) lessor strategies work for your favor , and what factors you can affect directly.

What isn’t hard, or magical, is why Canadian business owners and financial managers continue to embrace lease finance for the assets they need for their business.

It's simply a cost effective Canadian business financing strategy that allows your company to acquire virtually every asset your firm needs - that includes plant equipment, rolling stock, computer and telecom equipment , software, even that corporate jet ... We thought of that last one while waiting in line at the airport the other day .

Other benefits we focused on in the past in order to educate clients include cash flow management, taxation benefits, and the general ease of doing business. Oh and by the way, numerous smaller costs associated with asset acquisition can be financed also.

So what does in fact affect your leasing rates? It's a number of things, so we forgive clients for meekly asking ' whats my rate '.

Factors that affect your lease pricing at a macro level include perceptions by the lessor of your industry, your current financial strength (That’s very important) and the general asset value and remarketability of the new or used equipment that you need. All of these play a key role in lease pricing.

Is the actual pricing of a lease a disadvantage? Possibly, we certainly don’t think that’s anywhere in the majority of cases, but a careful lease buy analysis with a focus on your overall condition is highly recommended. While this can be done on the back of a napkin, numerous spreadsheet templates can get you to the goal line quickly. Even your lessor can provide you with one, but we'd suggest you ask for the formulas in the cells... just kidding.... well maybe not!

Various finance nuances exist in lease pricing. Ask your lessor if your payments are calculated in advance or arrears. The 5 elements of all lease prices are:

Term
Rate
Value of Asset Financed
Payment
End of Term Value

If you know any 4 of those you can actually calculate the last one very easily, or call us if you don’t have a lease finance calculator!

We tell every customer they get to pick their own lease rates! When the shock finally lifts of their faces we explain that your current overall financial risk profile in your financials really has determined to a large degree your current lease prices. In Canada rates range from 4-24% per annum on leases based on overall credit quality.

As a quick example, using a 100k asset over, say a 4 year term your monthly payment could vary between 2250$ and 3196$ using the above data. How important that monthly payment amount is to you based on the critical need of the asset to your company will be a final key decision driver.

One other area you need to investigate is the residuals and purchase options. They clearly define the two basic differences in operating and capital leases and can significantly affect your monthly payment.

Think we've covered it all? Well threes actually a whole litany of other things that will ultimately affect that lease price. They include prepayment penalties, upgrade formulas, commitment fees and down payments, and a handful others.

So how can Canadian business ' stay in the game' when it comes to both understanding and achieving best leasing rates and lease pricing in Canada. One option is to seek an expert, so consider talking to a trusted, credible and experienced Canadian business financing advisor who can assist you in the lease finance jungle. BE CAREFUL OUT THERE!






7 PARK AVENUE FINANCIAL
IS A CANADIAN LEASE FINANCING EXPERT





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/leasing_rates_equipment_lease_pricing_finance.html

‘Takin’ Care Of Business ‘ AR financing . Accounts Receivable Loans Are ‘ Working Overtime ‘ !

Canadian Receivable Finance – Working Overtime!

Information on ar financing in Canada . Why accounts receivables loans play a key role in Canada’s business financing



AR Financing in Canada. It's clearly ' takin' care of business' when it's used properly with respect to accounts receivable loans for financing your business in Canada .

One of Canada's greatest rock anthems gave us some ideas about how receivable financing in Canada is appropriate for thousands of firms, and getting more traction everyday. ‘Start your slaving job to get your pay ‘... perhaps BTO meant to stress the importance of collecting receivables in order to facilitate cash flow for payrolls? So as the song says ' take good care of my business ‘... and you don’t need to ‘work overtime.'


So what then are the advantages of AR financing in Canada and do they in fact make sense for your firm. Those advantages become very clear if in fact your firm has tried to access more traditional bank financing but finds itself unable to do so.

First of all the time and level of financing in accounts receivable loans (it’s not really a loan per se - it’s a monetization ' provides you with a significant amount of working capital immediately without the additional collateral and guarantees that might be required by another lending source.

And what do we really mean by ' immediately '. Well how is ' same day service ‘, because firms get funded typically the same day they generate sales and invoices.

Organizations like the Federation of Canadian Business speak extensively on ' ease of access' to financing for companies in the SME sector. AR Financing is typically very easy to apply for and turnaround time for a proper facility should never be more than a week or two.

Also, if you're dealing with the right firm (unfortunately many firms in Canada are not) you should be also able to finance U.S. receivables at no cost. Foreign receivables might, but no always require some level of credit insurance, and we're referring of course to non North American A/R.

The overall mindset of the Canadian business owner changes once he realizes the difference between A/R financing and a bank facility. So unlike a bank overdraft which is collateralized by your assets, accounts receivable loans are in effect the sale of your A/R to a third party finance firm. Oh , and by the way, as your business grows so does your receivable loan facility, there is no real need to ' reapply ' or wait until you have another year of financial statements under your belt .

So if we're so right about invoice financing in Canada why isn’t everyone on the program? Good question. The reality is that there is still a lot of lack of awareness of how the financing works, what it costs, as well as the perception that it’s non traditional in nature. If thousands of firms in Canada use AR finance we're quite sure it’s no longer that ' alternative ' in nature.

We do acknowledge though that if your sales are in fact shrinking or not stable that there are some challenges here and this method of financing might not be for your firm. The bottom line though that if you are in fact growing you can use cash flow from A/R financing to productively finance your firm. That includes by the way using the funds to purchase more effectively as well as taking supplier discounts, potentially alleviating the cost of accounts receivable loans.

Looking for a business financing solution that helps you control business cash flow performance and growth? Then speak to a trusted, credible and experienced Canadian business financing advisor today on how A/R financing can help your firm.

P.S. Again, it’s not a loan, it’s a ' monetization’!





7 PARK AVENUE FINANCIAL is an expert in RECEIVABLE FINANCE in Canada



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/ar_financing_accounts_receivable_loans.html

Business Acquisition Financing In Canada . You Don’t Have To Live On Bay Street To Make Acquisitions Finance Work

Buy and Finance A Business In Canada

Information on business acquisition financing in Canada . Strategies, tools , techniques and advice for merger and acquisitions finance .


Business acquisition financing in Canada. It conjures up visions of having to be a Bay Street / Wall Street heavyweight when it comes to sophisticated financial knowledge.

But for smaller and medium sized corporations there is a healthy element of ' do it yourself ' when it comes to acquisitions of competitors, synergistic companies, etc. But don’t under emphasize the importance of a solid external team to assist you . Let's examine some solid ' need to know ' info that will help the Canadian business owner and financial manager address any acquisition successfully.

The amount of proper financing that you can generate, internally and externally (mostly externally!) will ultimately play a large part in the size of the company with whom you might be acquiring, or merging with. Here is where valuations come into play and anywhere from 30 - 50% of the final price that you agree on might in fact have to represent a cash type scenario.

Naturally there are a thousand stories in the naked city, as many firms are acquired simply for the reason that they are not profitable for the current ownership. This does bring up a very key point though, which is that if you are looking at acquiring a firm that is in trouble, losing money, losing market share/sales etc then in fact a lot less cash is required for the transaction. However at that point you'll obviously have other challenges to address.

If there is a solid piece of advice we can give to the Canadian business owner and financial manager it’s to start a financing strategy around your acquisition early on. That final capitalization of the proper amount of debt and equity is critical.

When contemplating bank financing for business acquisition financing in Canada a solid, realistic and succinct business plan is required. We see many plans from clients that are far less than ' succinct ' and therefore raise more questions than answers.

So what does one in fact have to demonstrate to the bank? A good start is how your firm will operate the business - so a good examination of the financials and any key issues around seasonality of sales and cash flows, customer concentration, production, and credit terms are key.

If the business you are acquiring does in fact have challenges it's clearly a good time to demonstrate how you will implement controls and changes around those challenges.

Spend a lot of time considering the amount of leverage you will ultimately have when acquisitions are completed. It's tempting of course to become highly leveraged but this is the classic double edged sword of business financing , and don’t think that high leverage will guarantee higher returns to shareholders, as that debt you are now carrying can in fact become a day to day nightmare down the road if not managed or financed properly .

Business acquisition financing in Canada is about finding a solid opportunity, analyzing your transaction carefully, and closing with the best financing possible based on your industry profile of debt and overall capitalization. Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with acquisitions that make sense- financially!

Talk to 7 Park Avenue Financial About
Business Acquisition Financing





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_acquisition_financing_acquisitions.html