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

How To Kick Start Franchise Financing Success. Funding Your Franchising Loan Needs In Canada

Canadian Franchise Financing Tips / Tactics


Information on franchise financing in Canada . How does the entrepreneur access funding for a franchising loan ?



Thousands of Canadian would be entrepreneurs in Canada clearly recognize the trend that franchising in Canada is a major industry and a leading contributor to the economy as a whole. You want to be a part of that trend!

So, that being said how does the entrepreneur translate that opportunity into his or her ability to kick start franchise financing funding in a manner that makes getting a franchising loan a success as a part of their overall entrepreneurial strategy?

Let's share some solid advice on what type of financing you should utilize to successfully complete your new or existing business acquisition. Yes, existing franchises can be purchased and financed also!

The amount of money that you yourself put into the business is a key factor in your potential sales and profit success. But two questions immediately arise: Do those funds necessarily guarantee you success based on how much you put in, and secondly, where do you access the balance of the finances you require?

One somewhat intangible issue that also always comes up is the ability of the entrepreneur/ borrower to demonstrate how much experience they have in a chosen industry or business. So things like your own outlook on being an entrepreneur / business owner (it’s not as easy as you think) and matching your skills to the type of business you buy and finance are critical.
By the way, we think there are very few executives in even the largest most successful corporations in Canada that have the total skills involving sales, marketing, operations and finance as a total skill set . Those people are the real superstars.

Naturally one of the reasons you purchase a franchise is that you are buying into, hopefully, a proven system of a brand, business model, marketing and advertising assistance, etc.

OPM is important when it comes to franchise financing. That of course stands for Other People Money, which represents the balance o the funding you need for your franchise purchase. In Canada, along with your equity, or we'll call it a down payment the balance of your financing comes from either a commercial finance company that either specializes in franchise finance, or one that can compliment the financing you need. A good example of that is an equipment finance company that can acquire and lease assets for you such as POS systems, other hard assets, vehicles, etc,

In general anywhere from 10 to 40%, sometimes more is required as a down payment or equity contribution to your business. We quickly add that that doesnt always necessarily mean that money is permanently contributed or ' tied up ‘, but you just must show that you have access to liquidity to get the busines off to a good start for working capital and growth purposes.

Two key points for the franchisee - a solid majority of the franchising loan scenario in Canada is done via the government BIL/CSBF program. It offers great rates, terms and structures for the acquisition of your business. Where the program falls down a bit is when it comes to a service type business where there are limited or no assets to purchase / finance.

Our other key point - have a crisp ' package ' in place when it comes to a business plan, industry overview, financial projections, etc. This isn’t the rocket science it sometimes seems when it comes to getting a good proposal in front of your lender. You can't afford to miss out on your business purchase just because of a poor presentation package, and it can also be easily accomplished by using an expert such as a Canadian business financing advisor that is experienced and has success and knowledge of franchise finance.

7 PARK AVENUE FINANCIAL
CANADIAN FRANCHISING FINANCE 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/franchise_financing_funding_franchising_loan.html

Untangling Biz Financing Via ABL Capital . Overcome Business Line Of Credit Finance Hurdles !

It’s Changing Times In Business Finance . Here’s One Reason Why !



Information on accessing ABL capital in Canada . Let the asset based business line of credit help you untangle the biz finance maze



Is ABL capital a solid or maybe your ‘best choice’ when it comes to untangling the challenges your business faces when it comes to a comprehensive business line of credit? We think it's a solid finance solution and many industry experts agree. Here is why!

What is ABL? .... which of course stands for asset based lending. We ask that question only because it, and other terms such as ' cash flow ' mean different things to different people. In our terms it is a total solution business line of credit that allows you to borrow against your receivables, inventory, equipment, and even real estate, all within one revolving facility. It is as simple as that.

It's really a total solution that , in effect, is an ' evolution ' in the concept of a business line of credit. For the asset based lending company, your new partner in business banking its all about the balance sheet. That is of course compared to Canadian commercial business banking, where it’s all about the balance sheet... and your cash flow statement, and your income statement... and your personal guarantees. Those of course are what drive Canadian business banking rates to be so low and so great... if you can access them!

If we had to line up the different companies that access ABL capital its a diverse group - its larger firms that are very bankable but can access more capital at better rates , all the way down to start ups with a more limited financial history, at the same time having assets that can be financed .

We are pretty sure this doesnt exist in Canada, we certainly haven’t seen it yet, but in the U.S. there is a huge ABL capital market known as ' Second Lien '. Under these facilities the asset based lender sits on top of the senior bank facility, in 2nd position, and advances even more against the total assets already being financed by the bank. Surely that is one reason why our banking and lending practices are much more conservative in the world marketplace - we don't lend twice against the same asset!!

When we sit down and talk with clients about what can be financed and how its often practical to finance current asset accounts such as a/r and inventory via an ABL line of credit, while at the same time financing the equipment and other fixed assets under a separate facility with a finance partner/lender who has an appetite for those type of assets. That total combination of two facilities gives our client a lower ' blended cost ' of funds and at the same time increases borrowing power - talk about a ' double whammy '!

What made asset based finance popular in Canada when it comes to business owners and financial managers seeking solid biz credit facilities? A lot of it revolves around 2008/2009 when financial markets went awry and thousands of Canadian businesses started to investigate alternative methods of financing their business. And ABL sure was one of them.

And the irony in the above? Simply that companies that even theoretically qualified for more traditional financing could not get it... enter the ABL facility!

So is there a trend emerging in Canadian business lines of credit. We think there is. In the U.S. experts confirmed that in 2011 asset based credit lines almost doubled. Did that happen in Canada? We think it did, perhaps somewhat less so, but clearly the emergence of a new trend.

If your company is looking to grow (or just survive) investigate the benefits of ABL capital , making you a more effective competitor . Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in making the right decision with the right type of facility.

7 PARK AVENUE FINANCIAL
CANADIAN ASSET BASED LINE OF CREDIT 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 9 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/abl_capital_business_line_of_credit_finance.html





















Stan Prokop

Christmas Cancelled Due To Cash Flow Financing! Avoiding Problems And Accessing Solutions To The Working Capital Gap In Canada

Business Financing Not Working For Your Company . Here’s Why!

Information on critical cash flow financing problems , What solutions can the Canadian business owner use to solve working capital problems



Say it isn’t so. Please say it isn't so. But it is so. There it was. The front page of Canada's best known business page, Sept 10/2012. It was a headline that screamed at us to look into it.

What was the story ?It involved one of Canada's most iconic and largest corporations , indicating that the company had chosen to preserve cash due to their investments in growth and the future . The result? Travel cancellations, no new hires, and yes ... and we're quoting here:

‘CUTTING ALL FUNDING FOR CHRISTMAS PARTIES’


We suppose if they had been politically correct they should have said ' holiday parties ' but we’ll weigh in on that one another day ... as in never.


So, cash flow financing. Is it that important that it makes the front page of Business news? Well we have always thought it was so thanks for the vindication.

Let's examine why front page news is where working capital solutions belong. Business owners and managers in larger corporations all the way down to start up realize that its that elusive cash flow that runs their business on a daily basis ; and in the case of our subject company today allows you to plan and grow for the future .

So, it’s all about careful planning, and solutions to not run out of cash. And as we're always saying, you can both access cash flow and working capital solutions, as well as managing your assets to optimize cash.

The business owner always struggles with debt and although that strategy (taking on debt) is on way of accessing capital it's certainly not always the solution. In fact we tend to favor two better solutions:

Managing asset turnover in receivables and inventory (and payables)

Monetizing assets into cash flow solutions that include:

Bank credit lines
Non bank business lines of credit
Receivable and inventory financing - together or separately
Supply chain / PO financing
Monetizing valuable tax credits under the SR&ED or **Film Tax Program - * unfortunately not all of us make movies though


Canadian business owners and managers need to run their business while at the same time understanding their cash flow cycle - its not that simple - just doing some basic calcs around how long it takes for 1 dollar to flow through your corporations, from the time you buy supplies and services to the point where your valued clients pay you . It doesn't take long for the business owner and manager to understand that cycle can be anywhere from 60 -120- days. And in between that? It's the cash flow gap!

Also, differentiate between making a profit on paper and having cash, or access to cash on your balance sheet. Huge difference.

In Canadian business financing today there are numerous solutions for working capital. Some are called ' alternative ‘... many are newer and innovative, often called ' alternative '. All of them can work for your firm when you understand how they work, what they cost, and what the benefits are.


So, Xmas cancelled. We hope not. But in the meantime, speak to a trusted, credible and experienced Canadian business financing advisor on how you can access cash flow financing that makes sense for your firm... today.

7 PARK AVENUE FINANCIAL
CANADIAN CASH FLOW AND BUSINESS FINANCE EXPERTISE

Don’t Commit These Deadly Sins In Canadian Lease Financing . The Business Equipment Leasing And Loan Decision

It’s Never Too Late To Get Equipment Leasing Right



Information on lease financing in Canada . Serious mistakes lessees can make when entering into a business equipment leasing or loan .






Are there some ' deadly sins ' Canadian business owners and financial managers can make when it comes to lease financing in Canada? We think there are a good handful of them, at least 4, so let’s cove those off. More importantly, let’s talk about avoiding them and using business equipment leasing as a solid tool to help finance your business.

So, what are those 4 key areas of potential ' sins' when it comes down to that asset acquisition decision? For us it comes down to:

Entering into the wrong type of equipment lease/ loan

Mistakenly purchasing the asset that in effect depreciates while at the same time providing your firm with certain benefits over a period of time

Entering into a term loan for the asset

And finally...

Working with the wrong lease finance firm



The good news is that there are some great solutions to avoiding today’s ' sins ' . A good place to start is spending some realistic time around both the costs and payments involved in your transaction, as well as any balance sheet and tax type issues that you might need to consider, if not now .. down the road!

The timing of cash outflows on your lease, versus the expected benefits is a key area to focus on. This is a classic way of weighing the alternatives to leasing. This analysis offers proof you are making the right decision!

Let's use a typical example, which in today’s case will be the acquisition of a computer, or a whole computer system, as well as all the related costs that come with that, i.e. software, maintenance, etc. That's an area of our businesses where real cash outlays are required these days!

So what must be considered in our example? Naturally actual cost is a factor. We have often said that using a financing mechanism such as asset finance in your business in effect helps you to remove what a dear friend of ours called ' the obstacle to innovation ‘. So just your ability to buy the best and the most with your dollars is one great way to ensure you're not committing one of today’s ' deadly sins '.

Other factors you should consider are the depreciation and obsolescence that comes with an asset such as this ... (or any other asset for that matter ... in truth some assets depreciate quicker than others - a cement truck can be leased or financed for ten years). Note to reader: We don't recommend financing computers and related equipment over a ten year period!!

Another key point is to ensure that the type of lease you enter into covers off what the leasing companies in Canada call the residual value, or end of term. Bottom line - focus on what you intend to do with the asset at the end of the term... is there some value still? If the asset can be replaced, upgraded, or still utilized it might be beneficial to enter into an operating lease versus a lease to own type scenario.

There are substantial differences in a loan versus a lease, including areas such as payment of the taxes, down payments required, balance sheet consequences, and credit requirements depending on who you are dealing with.

So who can give you a straight answer on what lease is best for you, and when? Resources include independent commercial lease companies, captive finance firms, bank leasing companies, etc. Or perhaps a solid decision is to use a Canadian business financing advisor who has strong relationships and knowledge about all of those resources, some of whom have very vested interests to make asset financing work more for them than you.

7 PARK AVENUE FINANCIAL
CANADIAN LEASE 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/lease_financing_business_equipment_leasing_loan.html

Can AR Finance Increase Profitability ? Looking For Some Clear Thinking On An Effective Receivable Invoice Financing Strategy / Partner?

Canadian Receivable Finance


Information on AR Finance in Canada . Can an effective receivable invoice financing strategy increase sales and profits . Here’s how !



A strange question? Can an AR Finance strategy actually help to increase your profitability? Top experts in the field indicate a strong case can be made for that statement, so all of a sudden receivable invoice financing has seemed to catch our client’s interest. No surprise there!

Whether we like it or not business history, just like regular history, tends to repeat itself. So unless the Canadian business owner and financial manager make a decision to change how they run and finance their business they are somewhat doomed to soldier on under the same current circumstances.

When we sit down and benchmark traditional bank finance against receivable financing the differences become quite clear. For the banks and business oriented credit union’s full repayment ability as well as secondary collateral (often that’s your personal guarantee) becomes the total focus. The banks focus on you as the owner, business equity, collateral and historical cash flow is... well... supreme.

Naturally we're the first to admit that if you can secure bank financing it does have significant advantages - they include the lowest possible cost of funds, your ability to deal very locally with your banker, etc. Our point is simply that there are alternatives that can still assist you to generate sales and profits.

Every business owner knows you can increase profits by lowering costs and increasing sales. But what they don't often address is their ability to turnover assets, in our case today accounts receivable. That continual turnover allows you to generate more sales and address the opportunity cost of doing something with your assets!

Naturally invoice financing is just one method or choice you the business owner has when considering how to accelerate sales and profit via proper financing. Our point is simply that invoice financing simply accelerates cash flow, which is a key driver to your profits and ability to sustain daily operations. At the end of the day its ' quick financing ' that allows the business owner and entrepreneur to address cash and revenue goals.

And don’t forget that you can take advantage of this method of financing in more ways than one - they include taking supplier discounts, taking on larger orders and contracts, and purchasing more efficiently based on your ability to pay suppliers and vendors better.

So, our bottom line today? Asset turnover can affect profitability. And Receivable financing enhances asset turnover. Alternatively said - working capital management works! when it comes to profits . (And don't forget to manage those long term assets also!) This makes you more effective as a company!

Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in growing profits and sales via a solid Receivable Financing program.

7 PARK AVENUE FINANCIAL
CANADIAN FACTORING FINANCE 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/ar_finance_receivable_financing_invoice.html

Is a Sale Leaseback of My Business Assets a Good Thing?

At various points in the economic cycle a business owner or financial manager considers a sale leaseback financing. Is that type of transaction advantageous, and what are the risks and benefits?

Many firms do not fully know about or understand the advantages of this type transaction. This is a classic alternative financing strategy that works best when it is a good deal for the lessee and the lessor. It does not work well when the lessor presumes it is a 'cash grab' by the lessee.

This type of financing should be contemplated if your firm has the following characteristics:

- Experiencing working capital challenges

- Declining profits

- Excess unencumbered assets

- High amount of debt


If a company has a high amount of debt a sale leaseback transaction can still be a very positive financing event. By structuring the the transaction as an operating lease the debt becomes 'off balance sheet '. This gives the appearance of the company being not so highly leveraged and quite often it can save the company from being in default of its loan covenants.

In many cases the sale leaseback can bring a significant amount of capital back into the firm.

So when does a firm consider such a transaction - every industry is different but if the firm is bottom line, over leverage, i.e. Debt too high, there can be advantages to an off balance sheet sale leaseback transaction.

If a company has historically had pride of ownership, and has significant assets, and is suddenly going through a high growth stage it also becomes a good candidate for a sale leaseback. Cash flows are restructured and the company gains significant new working capital.

The best candidates, overall, for this type of financing strategy are high growth companies who would prefer to invest additional cash in receivables and inventory. Naturally no lessor wants to consider such a financing if the company is in some sort of death spiral.

In some cases when assets have in fact appreciated (not depreciated in value) the company may actually be able to report a gain in earnings, as the sale leaseback transaction in excess of book value allows the company to book the sale leaseback gain into the profit account!

Many government institutions, such as municipalities, hospitals, etc may find this type of financing strategy as optimal in solving temporary budget cuts and working capital challenges.

In summary, a properly structured sale leaseback can provide new cash, enhance earnings, and in effect be a creative way to temporarily re finance the firm or institution.

7 PARK AVENUE FINANCIAL IS AN EXPERT IN SALE LEASEBACK FINANCE



Stan Prokop is founder of 7 Park Avenue Financial -

http://www.7parkavenuefinancial.com


The company originates business financing for Canadian companies,specializing in working capital, cash flow, and asset based financing. In business 10 years the company has completed in excess of 85 Million $ of financing for companies of all size. For info on Canadian business financing and contact details see:

http://www.7parkavenuefinancial.com/toronto_ontario_equipment_financing.html