business acquisition financing

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Business  Acquisition Financing In Canada : Finance Solutions Not Built On Sand
Opening  The Wallet On Financing Acquisitions In Canada In The Sme Commercial  Market







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Financing & Cash flow are the  biggest issues facing business today


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7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8


Direct Line = 416 319 5769

Office = 905 829 2653


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Business acquisition financing in Canada, when successful, requires that the finance component of the transaction be not built on sand. Strength is needed in this area, so lets ' open the wallet ' on acquisitions acquired properly. Let's dig in.


There are numerous methods of acquiring a business and raising the right amount of capital to finance the transaction - One of those that is less known to business folks is  ' subordinated debt ' - in effect an unsecured cash flow loan.


While a cash flow loan is almost always more expensive than traditional bank term loans it is more flexible and can often carry a large part of the total financing needed to complete a deal.  This loan ranks 2nd behind any secured debt, hence it's ' subordinate' to the secured finance part of the transaction.


If the loan is ' unsecured ' how then does the lender, i.e. a commercial finance company or a bank, view chances of repayment. Here it's down to 2 words - ' CASH FLOW'.  So if you're contemplating a cash flow loan as a part of your deal it's safe to say you should spend some time on:


Past cash flow analysis


Present Cash Flow


Future projected cash flow (by the way - we' never met a projection we didn't like ' said one of our mentors)


Why would owners/financial managers consider a cash flow loan for business acquisition financing? Simply because 100% secured asset financing might not be possible, and the other alternative,  ' owner equity' is less desirable because it’s either unavailable from the owners, or more dilutive.


Many times in business owners/managers find a situation whereby they can acquire a competitor or a strategic partner. The valuation price on the deal might be more than the assets can support - especially if current owners do not wish to be a part of the financing via some sort of 'vendor take back.' In many cases a cash flow loan might not be a part of required debt and other ratio covenants.


Other sources of capital available for financing a purchase include:


Government Guaranteed Business Loans


Asset Based term loans/lines of credit


Equipment Financing/Sale Leasebacks


Receivables/Inventory Finance


Whether it's an opportunistic transaction you come by or a sale of a business as part of the ' graying effect ' of older business owners the financing of a transaction, done successfully, can make your firm more strategic and competitive in your industry. 


So whether it's about cash flow, assets, profits, or sales growth consider seeking out and speaking to a trusted , credible and  experienced Canadian business financing advisor who can assist you with your acquisition finance needs.

' Canadian Business Financing with the intelligent use of experience '