Ever Prayed For Acquisition Financing ?

OVERVIEW – Information on business acquisition finance solutions in Canada. Financing acquisitions in the SME sector requires information on sources and methods of financingBusiness Acquisition Finance


Business acquisition finance solutions
in Canada don’t necessarily have to come with the requirement of saying a prayer. The ability to purchase, and finance a business requires knowledge of some fairly common sense factors coupled with expertise in some specialized areas. Knowing who to go to and what to talk about is key. Let’s dig in.

Top experts tell us that acquisitions financing is such a hot topic for a couple of different reasons – one is the eternal need of the entrepreneur to purchase and operate a business, the other is the amount of businesses available today , particularly in the SME sector , as many founders/owners retire.

Only 1 question remains then – how do you finance the purchase? While Canadian chartered banks can certainly pick up a good part of the slack many owners, as well as the financial profile of the firm they are buying, simply don’t meet bank requirements. Some statistics out of the states indicate that 80% of deals are bank rejected. That then requires specialized knowledge in a variety of other sources which can finance such transactions.

The one exception to bank participation in your deal is the Govt CSBF loan program, allowing you to finance business acquisitions to a maximum of 350k. However, that amount, as well as some other forms of ‘ top up ‘ financing might well get the entrepreneur on his or her way to close a deal.

Personal equity in the transaction is almost always a requirement in financing acquisitions. Amounts vary relative to the amount of capital you need and the risk profile of the deal. Also factored in there will be lender perception of your management depth and experience. Here’s where solid concise business plans focused on cash flow and profits make total sense.

Don’t forget also that the seller can also assist in the form of a vendor take back, the ‘ VTB ‘. While a lender appreciates the personal capital you are putting at risk the seller is also at risk to a certain degree when they agree to a vendor take back. More often than not they are always a positive influence on a deal.

The one thing to remember though is that in some cases a VTB might essentially be viewed as additional debt you are taking on. So that obligation must be factored into balance sheets and cash flows in your presentation.

Venture capitalists and private equity groups finance only a small portion of businesses for sale – primarily because these transactions are often done in only the millions and tens of millions of dollars.

Other solutions to finance a business acquisition include:

Unsecured cash flow loans

Equipment financing

Bridge loans

Sale leasebacks

Asset based lending

Working capital term loans from Canada’s crown corporation bank

A/R financing

If you’re looking for solid, yet creative ways to finance a business purchase seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you with your acquisition needs.


Author: Stan Prokop
7 Park Avenue Financial :

http://www.7parkavenuefinancial.comBusiness Acquisition Finance
Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 – Completed in excess of 90 Million $ of financing for Canadian corporations . Info /Contact :

7 PARK AVENUE FINANCIAL = CANADIAN BUSINESS ACQUISTIONS FINANCING EXPERTISE

 


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