Talking Serious On Financing Mergers and Acquisitions For SME Commercial Finance Needs
OVERVIEW – Information on financing mergers and acquisitions in Canada . SME Commercial finance needs can be always be met if you are purchasing a business or merging two firms .
Mergers and Acquisitions financing in Canada is somewhat of a ‘ connect the dots ‘ challenge for many entrepreneurs, business owners and financial managers who are looking to successfully complete SME Commercial Finance transactions in Canada . Whether you’re a buyer or a seller it’s all about knowing alternatives and recognizing how obstacles can be overcome… bottom line… ‘Talking serious ‘! Let’s dig in.
Quite often a calculated merger makes sense for many companies – other times opportunities arise (sometimes at the misfortune of others) that cannot be ignored but should be exploited in a positive manner. Raising capital in either a sale, merger, or acquisition creates wealth when executed properly.
In many cases it’s simply a sale and purchase of assets and other interests a business might have, up to and including business ‘ relationships ‘.
One of the immediate complexities of any sale or purchase of a business is the issue of ‘ asset’ versus ‘ share’ transactions. Here’s where talking to your lawyer and accountant can help avoid major pitfalls. Issues to consider are asset values, taxes, and potential liabilities.
Existing financing must also be addressed, including secured creditors, leases, premises, etc.
In a lot of cases a formal ‘ opinion’ or ‘ valuation’ of certain or all assets or total busines value might be required. Many times a lender will specify a certain appraiser or valuator as a condition of their financing, which is a case of a trusted relationship between the lender and the appraiser.
Highly recommended in any case of purchase, sale, or merger is a proper business plan that reflects areas of value and challenge – most importantly cash flows.
Valuation plays a large part in the successful financing of any transaction. Capital raised is dependent on actual asset values ( a/r , inventory, equipment ) and ability to generate cash flows to pay down acquisition financing as well as daily operational financing .
Many less experienced business people are often either confused or unaware of the different valuation methods – ‘ Comparables ‘ ‘ Times Earnings/ Times Sales ‘ ‘ Discounted Cash Flow ‘ ‘ Cash Flow Analysis ‘ etc.
The type and cost for the valuation will ultimately depend on the transaction size, complexity and risk profile.
Ways to achieve merger and acquisition financing in the SME Commercial area? They include;
Govt Small Business Loans
Bank term loans / operating facilities
Asset based lending
Sale Leasebacks / Bridge Loans
They might be separately considered, or in some cases cobbled together to successfully complete a transaction. Don’t forget also that ‘ Seller Financing’ can often be the last piece of the puzzle.
If you’re looking to ‘ talk serious ‘ when in comes to purchases or merging or selling a business seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you in your needs.
Stan Prokop – 7 Park Avenue Financial :
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 MERGERS & ACQUISITIONS FINANCING
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