Raising Cash Finance Business Purchase Acquisition Solutions In Canada

YOUR COMPANY IS LOOKING FOR BUSINESS PURCHASE ACQUISITION FINANCING!

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Financing & Cash flow are the biggest issues facing business today

ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?

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South Sheridan Executive Centre
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Oakville, Ontario
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Financing the purchase of an existing business in Canada comes, fortunately, or otherwise, to the fact that ' size counts '! . So raising cash to finance a business purchase acquisition will directly relate to the size of the business you are financing, as well as the asset quality.

PROFITS AND CASH FLOW PLAY A KEY ROLE IN DUE DILIGENCE

Naturally how the company you are purchasing and raising cash for is doing play a key element, as often less cash is required and the focus is on financing remaining assets. So a solid rule of thumb to keep in mind in business acquisition is simply that the amount of cash and ' finance power ' you need is very directly related to your target company's situation on profitability. In other words, a lot less real cash is required if a company is not profitable or barely breaking even. That certainly makes the job easier, right?

At 7 Park Avenue Financial when talking to clients about funding to buy a business and financing a business purchase we often feel they are focusing solely on the purchase, and not on the ongoing capital and cash flow needs of your newly acquired business.

A PARTNER OR MINORITY INTEREST INVESTOR?

We also have to consider the fact that raising cash for a business might often be more feasible if you have a strategic partner or another equity investor. How to finance a business purchase with a minority investor is an issue that sometimes comes up here are 7 Park Avenue Financial. That unfortunately will dilute your equity position but might be realistically the best course of action. And it does certainly allow you to purchase and fund a business with less ' monetary' contribution to the deal.

In most situations the actual higher cost of a business purchase will force consideration of a partner/investor, etc - That will obviously allow the transaction to probably carry less debt while still allowing controlling interest in the overall financing structure.

PRIVATE EQUITY MIGHT PLAY A ROLE IN YOUR TRANSACTION

In the case of larger transactions, Canadian business people might well look to a private equity partner in the deal. Their assistance in helping you complete an equity investment, as well as their experience in any specific industry is of course a valuable consideration. And to sum up the whole issue of getting either a strategic or operating partner or private equity group we can simply say that oftentimes this might well add credibility and realism to your offer in the eyes of the seller.

KEY ISSUES IN BANKS FUNDING YOUR ACQUISITION

Bank financing in Canada is available to finance business acquisitions. You or your Canadian business financing partner needs to address the following issues at this point:

A concise overview of how you will run the business - i.e. management depth, experience, etc

You need to ensure the industry your business is in is ' in favour' when it comes to a bank appetite

Your business plan and projections have to be realistic relative to cash and working capital resources regarding operations and growth

In a perfect world - and we know it's not! you want to be in a position to demonstrate sales growth, profits, and a balance sheet that hopefully won’t have a debt/equity ratio of 3:1 as an example. And your assets such as inventory and receivables should demonstrate borrowing power quality in business acquisition financing.

OTHER METHODS OF FINANCING A BUSINESS PURCHASE

Other ways to success in financing an acquisition around business purchase include :

Asset-based lending

Bridge loans

Use of sale-leasebacks

The government SBL loan if the business has under 10 Million in revenue.

CONCLUSION

In order to buy an already established business entrepreneurs must ensure they have researched and valued the target company properly with a focus on understanding key issues that might impact the new company in the long term. Ensuring a proper capital structure is key and focus on a flexible transaction that allows the buyer and seller to negotiate properly a fair deal properly.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor when it comes to a capital raise for a business purchase acquisition and proper acquisition finance structures in Canada. Our goal is solely to help you finance an acquisition.