OVERVIEW – Information on buying a business in Canada and the techniques and key issues around company acquisition financing . 3 key factors can play a role in the successful purchase and finance of an existing business or competitor
Buying a business in Canada may not be as challenging as you might think. Although some maintain credit markets are ‘ tight ‘, transactions with the right fundamentals and homework done still make a lot of sense. 3 key points cannot be overlooked. Company acquisition financing is in fact available from a number of sources – Here they are, so let’s dig in.
Valuation, i.e. what you’ll pay for a company is of course key. Overpaying is not our recommended strategy! , and underpaying can of course reveal a number of issues… much later! So the business owner/ entrepreneur/ financial mgr must know how to analyze the real value and ‘ earning power ‘ of the business you’re looking at acquiring… or merging with.
That valuation process if of course accomplished by taking a hard look at those financial statements – either on your own if you have got some expertise, or an expert business advisor in this area. What in fact are you buying? When you think of it, it comes down to assets or cash flow/profits. What you can do with those ‘ assets’ is equally as important
Who can in fact assist you in the entire valuation, and financing process? It’s all about getting access to the type of business and financing advisor who can help you get information, determine real value, and then of course structure and assist in financing the deal via the proper strategy. You’re looking for someone to work with you, not for you – someone totally focused on what you are trying to achieve.
That whole process of assistance will pay off in dividends later, only because you got a good value for the company you’re buying, the deal was done with the right amount of confidentiality, and you put the right legal and financing structure in place.
The ability to ‘ pick apart ‘ the financials and put a matching company acquisition financing deal in place is key to success. While a fair price makes sense to both buyers and sellers as a buyer you want to know what level of financial success you can take the business to with your mgmt skills and industry expertise. Things like the state of the industry you’re in, product and service reputations, etc. are key.
Look at trends in operating ratios and sales and benchmark those against competitors. If the company wasn’t managed properly in the past you might need all new levels of capital and financing.
Financing to both acquire and run the company is important .Set up a list of key issues you want to explore and ensure you can tackle each one. Those issues include a total understanding of profits, what working capital and credit lines you need, and what those assets are really worth and contribute.
Financing for buying a business in Canada comes from a variety of sources. In many cases a ‘ combo’ approach works. Those solutions? They include:
Govt Guaranteed Small Business Loans (they are not as small as you think
Asset based lines of credit
Unsecured cash flow loans
Vendor takes back strategies
So, a recap of our 3 critical issues. They are valuation, using the right expertise and advisors, and understanding how those financials will take you to the right business finance strategy.
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 finance 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