YOUR COMPANY IS LOOKING FOR BUSINESS PURCHASE ACQUISITION FINANCING!
Business Acquisition Financing: Unlocking Opportunities
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
Suite 301
Oakville, Ontario
L6J 7J8
Securing the right financing for a successful acquisition ensures a smooth and successful transaction.
Unlock your business’s potential with strategic acquisition financing.
7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer BUSINESS ACQUISITION FINANCING solutions that solve the issue of cash flow and working capital – Save time and focus on profits and business opportunities
Canadian Business Financing with the intelligent use of experience
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 acquisition will directly relate to the size of the business you are financing and the asset quality.
Business acquisition finance is a way to achieve business growth and expansion. Whether you’re an entrepreneur looking to buy a small business or a corporation aiming to acquire a competitor, understanding the various financing options available is key to making an informed decision.
Let the 7 Park Avenue Financial team show you real-world solutions for financing business acquisitions while at the same time providing valuable insights to help you navigate this complex process successfully.
PROFITS AND CASH FLOW PLAY A KEY ROLE IN DUE DILIGENCE
Naturally, how the company you are purchasing and raising cash for is doing plays a key element, as often less cash is required, and the focus is on financing remaining assets. So, a solid rule of thumb to remember in business acquisition is that the amount of cash and ‘ finance power ‘ you need is directly related to your target company’s profitability and debt financing situation. 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 must consider that raising financing to buy a business might often be more feasible if you have a strategic partner or another equity investor through equity financing.
How to finance a business purchase with a minority investor is an issue that sometimes comes up here at 7 Park Avenue Financial. Unfortunately, this will dilute your equity position, but it might be realistically the best course of action. It certainly allows 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 BUSINESS ACQUISITION
In the case of more significant transactions, Canadian business people might well look to a private equity partner in the deal.
Mezzanine financing is another flexible option that can cover the gap between the purchase price and financing from other sources.
Their assistance in helping you complete an equity investment, as well as their experience in any specific industry, is, of course, a valuable consideration. 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 FINANCING
Bank financing in Canada, often through a bank loan, 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 and profits, and you want to have a balance sheet that hopefully won’t have a debt/equity ratio of 3:1. And your assets, such as inventory and receivables, should demonstrate borrowing power quality.
OTHER METHODS OF FINANCING OPTIONS FOR A BUSINESS PURCHASE
Other ways to succeed 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.
A common method is securing an acquisition deal, where a senior lender provides a loan secured on the assets of the company and determines the multiples of EBITDA
KEY TAKEAWAYS
-
Types of Acquisition Financing: Understanding the various financing methods, such as a business acquisition loan, bank loans, seller financing, and SBA loans, is crucial for identifying the best option for your needs.
-
Benefits of Business Acquisition: Recognizing the advantages, including increased market share, diversification, and growth opportunities, can guide strategic decisions and help find the optimal financing structure.
-
How to Qualify for Acquisition Financing: Securing financing requires evaluating financial health, preparing comprehensive business plans, and meeting lender requirements.
-
Interest Rates for Acquisition Loans: Understanding how interest rates affect the total cost of borrowing can help you compare options and choose cost-effective solutions.
-
Valuation of Target Business: Accurate valuation of the target business ensures you pay a fair purchase price and helps negotiate favourable terms to facilitate a smooth ownership transition.
CONCLUSION
To buy an already established business, entrepreneurs must ensure they have properly researched and valued the target company, focusing on understanding key issues that might impact the new company in the long term. Ensuring a proper capital structure is key, and focusing on a flexible transaction allows the buyer and seller to negotiate a fair deal properly.
Call 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor regarding business financing for a business purchase acquisition and proper acquisition finance structures in Canada. Our goal is solely to help you finance an acquisition.
FAQ
What are commercial finance options?
Commercial finance options refer to various funding sources available to businesses, including loans, lines of credit, and alternative financing methods. Visit: https://www.7parkavenuefinancial.com
How can commercial finance options benefit my business?
Commercial finance options can enhance cash flow, provide flexibility in funding, and offer opportunities for business expansion and operational improvements. Visit: https://www.7parkavenuefinancial.com
What types of commercial finance are available?
Businesses can access several types of commercial finance, such as traditional bank loans, equipment financing, invoice factoring, and non-bank asset-based lines of credit. Visit: https://www.7parkavenuefinancial.com
How do I choose the right commercial finance option?
Selecting the right finance option involves evaluating factors like loan amount, repayment terms, interest rates, and your business’s financial health. Visit: https://www.7parkavenuefinancial.com
What is the difference between secured and unsecured loans?
Secured loans require collateral, such as property or equipment, while unsecured loans do not, generally resulting in higher interest rates for unsecured options. Visit: https://www.7parkavenuefinancial.com
What is invoice factoring?
Invoice factoring is a financing method where businesses sell their outstanding invoices to a factoring company at a discount to receive immediate cash. Visit: https://www.7parkavenuefinancial.com
How does equipment financing work?
Equipment financing allows businesses to borrow funds specifically for purchasing equipment, using the equipment itself as collateral. Visit: https://www.7parkavenuefinancial.com
What role does credit score play in obtaining commercial finance?
A good credit score can significantly impact your ability to secure commercial finance, often resulting in better terms and lower interest rates. Visit: https://www.7parkavenuefinancial.com
Can startups qualify for commercial finance options?
Yes, startups can qualify for various commercial finance options, though they may face stricter requirements and higher interest rates compared to established businesses. Visit: https://www.7parkavenuefinancial.com
What are alternative financing options for businesses?
Alternative financing options include crowdfunding, asset-based lending, factoring/receivable financing, peer-to-peer lending, and merchant cash advances, providing flexibility beyond traditional bank loans. Visit: https://www.7parkavenuefinancial.com
What is the application process for commercial loans?
The application process typically involves submitting financial statements, business plans, and credit information to the lender for review. Visit: https://www.7parkavenuefinancial.com
How can I improve my chances of getting approved for a commercial loan?
Maintaining a strong credit score, preparing detailed financial documents, and demonstrating a solid business plan can improve approval chances. Visit: https://www.7parkavenuefinancial.com
What are government-backed commercial loans?
Government-backed commercial loans, such as SBL loans in Canada under the Canada Small Business Financing Program, offer favourable terms and lower interest rates with partial government guarantees. Visit: https://www.7parkavenuefinancial.com
