YOU’RE BUYING A COMPANY - FINANCING ASSISTANCE NEEDED?
HOW TO BUY A BUSINESS IN CANADA - SOLUTIONS FOR BUYING AN EXISTING BUSINESS
You've arrived at the right address! Welcome to 7 Park Avenue Financial
Financing & Cash flow are the biggest issues facing business today
ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?
CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs
EMAIL - sprokop@7parkavenuefinancial.com
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8
Phone / Direct Line = 416 319 5769
HOW TO FINANCE BUYING AN EXISTING BUSINESS IN CANADA
How to buy a private company in Canada! Properly structured business acquisition financing loans are critical to success in buying a company or business in Canada. As a business owner and financial manager, your goal is to pay the right price on the business valuation and merge that with the financing you need to get a loan, or loans, to make your transaction work. Helping you choose the best acquisition loan for your needs is our goal at 7 Park Avenue Financial.
WHAT TYPE OF BUSINESS DO YOU WISH TO PURCHASE
In some cases when assessing how to finance a business purchase you might even be executing a merger or even buying a strategic partner or competitor; in any case, to finance business properly is key. It might be what some consider a ' small business' or even a larger transaction that might involve financing a take over financing, or a merger or leveraged buyout/management buyout in the acquisition financing world. Buying out a business partner may also be part of your final strategy.
While bank finance may well handle many transactions it's important to explore all funding options - including issues around asset sale vs share sale implications.
Here's a great article from Forbes Magazine on some of the pitfalls and mistakes a buyer can make when buying a business - Click here for the article!
SME/SMB SMALL BUSINESS ACQUISITIONS / BUYING A BUSINESS IN CANADA
A small business acquisition loan is, of course, outside those large corporations, public and otherwise in Canada, that have the talent and corporate financing that they need to get a traditional bank loan and other types of financing. It's the small and medium-sized sector that we're focusing on. Those Bay street boys have all the help they need. But in any case, a business financing advisor is usually key to closing your deal in a company acquisition.
Many business owners and their financial managers often try to 'go it alone. Finding later that road is a painful and expensive one that burns some bridges along the way. So how can a qualified business finance advisor help you?
You should also consider the implications of financing a business on a going-forward basis - what business financing options do the purchaser have to consider future business credit needs around buying or upgrading equipment and technology.
HOW CAN A CANADIAN BUSINESS FINANCING ADVISOR HELP YOUR TRANSACTION
There are 4 key areas that an experienced intermediary might assist you in. They include, but are not limited to:
1. Helping you develop criteria for your decision and a possible financing structure
2. Reviewing and assessing all financial info that is available - you want to see all appropriate financials related to the business - thereby making it easier to get proper funding.
3.Possible assistance in pricing and purchase price valuation and seller financing options / intangible asset considerations - the right questions to ask when buying a business will help validate your final buy decision around your purchase agreement terms and how to value a business is a combination of art and science - Not all buyers understand that methods of business valuation differ within industries
4. Due diligence around fixed assets and liabilities on the balance sheet - The process of due diligence is key to validating value and chances of success, including areas such as intangible assets and goodwill due diligence.
FOCUSING ON BUSINESS ASSETS AND CASH FLOW
Most important? Structuring a small business acquisition loan that makes sense based on assets and cash flow. And business loan rates are important to the overall financing strategy. In some cases, real estate may be a part of your transaction and will often be financed separately. A common structure for a business purchase revolves around a term loan for the actual acquisition and a working capital loan or line of credit financing for ongoing operations.
USING ALTERNATIVE FINANCING OPTIONS AND METHODS TO FUND YOUR BUSINESS PURCHASE
In the alternative lending area, a higher interest rate is often attached to your purchase, but it becomes a question of access to capital versus the cost of capital to complete your transaction properly. It's a good idea to explore all your options in funding the purchase.
Being proactive and having a key sense of timing is always key, coupled with the quality of your financing package - one that will impress either a bank or commercial lender.
In many cases, seller financing can be a key final component to make your transaction happen. Seller financing business acquisition strategies work and can be very creative in the completion of your transaction.
GOVERNMENT SMALL BUSINESS LOANS TO ACQUIRE A BUSINESS / BUYING A BUSINESS LOAN SOLUTIONS
For smaller transactions around the decision to buy a small business consider the Canadian Small Business Financing Program for buying a business - while the emphasis to qualify is on a good personal credit score and positive credit history the government-guaranteed loan program has good interest rates and flexible repayment terms.
The type of business that is more easily financed under the ' SBL LOAN ' when buying a company in Canada is usually an asset-based business, not a service company. Long term loans with a lower interest rate are often an optimal solution to the right business purchase when it comes to a loan to buy a business with flexible terms and conditions.
WHAT ASSET CATEGORIES DO GOVERNMENT LOANS FINANCE IN BUSINESS PURCHASE LOANS?
The program finances 3 asset categories
1. Equipment
2. Leasehold Improvements
3. Real estate
SELLING SHARES IN A PRIVATE COMPANY
When it comes to how to buy shares in a company borrowers should note that asset sales are preferred by most lenders as opposed to a share sale purchase - given that private company's have not public market liquidity. Using a holding company to buy real estate in Canada is another possible use of the Government loan program.
There are other ways to finance a service business, primarily cash flow-based term loans - at an interest rate that reflects the cash flows of the business you want to buy when funding with debt.
It is also advantageous to work with someone who has a sense of your industry and business credit when considering business acquisitions to buy a company- that is important and has value.
In many cases, if you have found the 'right deal,' but without proper financing, there is, of course,' no-deal.' So to acquire a business and finance the purchase clearly becomes ' job 1 '
DEBT AND CASH FLOW CRITICAL SUCCESS ISSUES - COLLATERAL AND BALANCE SHEET ISSUES
The amount of debt and cash flow financing depends on several key factors: sales and cash flow history, quality of assets, and prospects for growth. The amount of capital the buyer and puts into the transaction is key and the business background experience of owners and managers in the business.
At 7 Park Avenue Financial, we will prepare a business plan and cash flow projections that reflect the true value and potential of the business purchase. Our business plans meet and exceed the requirements of all lenders.
CONCLUSION - HOW TO FINANCE A BUSINESS ACQUISITION
Need some solid help to buy an existing business and the right way on how to buy a company. Many buyers talk to us about trying to get 100% financing to buy a business - that is no possible in Canada. Your final purchase agreement and financing should reflect the proper balance of debt and equity and consideration for future financing ability.
Seek out and speak to a trusted, credible, and experienced Canadian business financing advisor with a track record of success who can help you buy and finance that company or acquisition at a period of time when financing is critical. Keep in mind the business you want to buy will always depend on proper financing. When it comes to everything you need to know to buy a business the 7 Park Avenue Financial team has the answers you're looking for when you're focused on underwriting and closing for business loans.
FAQ: FREQUENTLY ASKED QUESTIONS ON BUSINESS ACQUISITION LOANS
How do you buy an existing business?
Steps in buying an existing business :
The process can be broken down into 7 clear steps
- Step 1: Find a business to purchase.
- Step 2: Value the business.
- Step 3: Negotiate a purchase price.
- Step 4: Submit a Letter of Intent (LOI)
- Step 5: Complete due diligence.
- Step 6: Obtain financing.
- Close the transaction.
Why Would You Buy a Business
The benefits of buying a business include the ability to be able to immediately generate sales and profits and establish entrepreneurial goals for the business. Established businesses can be grown as opposed to built, allowing the purchase to build value and equity.
Click here for the business finance track record of 7 Park Avenue Financial
