OVERVIEW – Information on business purchase financing in Canada. Numerous options to buy and finance a company are available to owner/entrepreneurs
Business purchase financing in Canada
requires ‘ smart’ strategies to complete a transaction that make sense for both the buyer and the seller. In fact there are some proven winning tactics to effectively complete acquiring a business – even your competitor! Let’s dig in.
Whether purchasers like it or not the amount and type of financing capital you can raise will often have a dramatic effect on the size of company you are looking to purchase, or merge with. We’re talking of course of a combination of both debt and owner equity.
Of course valuation methods differ on that ultimate purchase price, and valuing a business from both the sellers and buyers perspective is an entire conversation for another day – suffice to say that good deals are completed when a fair purchase price is agreed upon.
If one expectation is clear in business purchase finance it’s that there must be a reasonable amount of both debt and owner equity. As important is the fact that different types of finance will require more owner equity. When using bank financing it is safe to assume a good level of owner equity/down payment will arise.
When buying a company that has profit and financial challenges the purchase price will more often than not be very attractive – the challenge being ‘ the turnaround required.
In many cases sellers are willing to participate in the sale of the business to you. That’s known as the ‘VTB ‘ – the vendor take back and can be a strategic part of your overall financing plan. Caveat Emptor – while the majority of banks or commercial finance companies view vendor take backs as quasi equity, in some cases this might simply be viewed as another form of debt – therefore subject to all those same capital/ debt equity issues .
What are the key elements of positioning your purchase of a company for a commercial finance company or bank? They include:
A solid business plan and operating strategy
A clear overview of the industry (which hopefully is not ‘ out of favor ‘ currently)
A financing plan for sales/ growth and profits
What then are the key mechanisms used to finance a business purchase? Note also that some of the finance strategies listed below is often a combination of financings depending upon how complex or large your transaction is –
Mezzanine financing / Cash Flow Loans
Asset based term loans or non bank business credit lines
Sale leasebacks / Equipment financing
Govt of Canada Guaranteed Small Business Loans
If you’re looking to buy a company and want to ensure you’ve got a winning finance strategy in place 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 needs.
Stan Prokop – founder of 7 Park Avenue Financial –
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years – Completed in excess of 100 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing. Info & Contact Details :
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Direct Line = 905 302 4171
Office = 905 829 2653
‘ 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.
7 Park Avenue Financial
Canadian Business Financing