OVERVIEW – Information on financing a business purchase in Canada. The right type of acquisition loans can make or break entrepreneurial success . Here’s how and why
Buying a business in Canada often provides a large opportunity for success. While many owners and financial mgrs may prefer the strategy of organic growth for sales/revenue and profit potential the attractiveness of not having to start a business cannot be discounted.
But financing the business purchase, i.e. putting your transaction together is another story. There are numerous options available to the entrepreneur/business person.
Bank loans (Secured and unsecured) – In some cases the actual cash flows of the business can be used to finance the entire business purchase. This can be augmented with either a fixed asset/equipment loan as well as a revolving business credit line.
Franchise loans – The booming franchise industry, which supports a huge part of the economy has niche finance programs available to acquire both ‘ new ‘ and ‘ ‘ existing’ franchises. Corporate stores owned by the franchisor can be financed, as well as existing franchisees that have chosen to sell. Tip: Find out why they are selling
Asset based Loans – These ‘ ABL ‘ loans cover the financing of assets as well as cash flow needs, including the often required credit line. These loans are ‘ non bank ‘ in nature and often provide higher ‘ loan to value ‘ financing when typically required loan and debt ratios don’t work.
Govt Small Business Loans – Here’s one great way to do it if you business fits some basic criteria – i.e. financing required for equipment and leaseholds.
While not necessarily a ‘ creative’ strategy Gov ‘t guaranteed business loans have solid ‘traditional’ type rates, no penalty for prepayment options, terms and structures, as well as.. wait for it … a very limited personal guarantee!
Finally, some help from Ottawa, but we digress…
We can’t over-emphasize the importance of ensuring you understand the financial position of the business you are looking to purchase/acquire. If the seller motivation is not 100% clear in initial negotiations it may well become clearer when the financial position of the company is understood.
In some cases owners may be willing to provide a ‘ VTB ‘ – aka the vendor take back. They may often make or break the financing as long as the seller is willing to take a 2nd position to your financing, and, more importantly, that your lenders don’t view the VTB as more ‘ debt ‘. Negotiations around the actual amount of the vendor take back will often dramatically change the nature of the selling price – upward or downward.
‘Goodwill’ is a difficult to finance part of any transaction, and the easiest financings in business acquisition tend to be ‘ asset ‘ oriented, not ‘ share sale ‘ focused.
Buying and financing that business purchase via a well thought out and executed finance strategy is a solid way to become a Canadian entrepreneur. Speak to a trusted, credible and experienced Canadian business financing advisor to kick start your business purchase.
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
Email = firstname.lastname@example.org
‘ 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