Tag: Acquisition

How to Finance a Business Acquisition #business #game

#business acquisition loan

#

How to Finance a Business Acquisition

Business experts often say that it costs less to buy an existing business than to build one from the ground up. If you are an entrepreneur looking into purchasing a business, there are a few items to consider when seeking financing for the acquisition that may strengthen your viability as a loan candidate and your ability to tap into a variety of potential financing sources.

Most lenders will want to review your business plan, and you should also determine the economic status and value of the business you re considering buying. Review the financials and consider having your banker and/or trusted financial advisor also review the numbers. Ascertain the value of the business, including any equipment, real estate, inventory and other assets.

To increase your viability as a loan candidate, convey your industry expertise and any management know-how to your potential lender. Lenders look for candidates who exhibit strong potential for success after acquiring the business. Show lenders that the transition period will run smoothly, and consider keeping existing managers on staff to help ensure an easy transition. Seasoned employees can also help you learn the inner workings of the business and help secure extended contracts with existing customers.

When seeking financing, consider these lending sources:

  • Family, friends or angel investors. Lenders will likely expect the buyer to provide between 20 percent and 50 percent of the capital upfront. If you do not have the initial capital to invest in the business, consider borrowing from family and/or friends. Another option may be angel investors–wealthy individuals who make equity investments in businesses at the early stages. They typically have expertise in the fields of businesses in which they invest and can also offer their resources and contacts.
  • Seller financing. Consider asking the seller if he or she can provide financing for the sale of all or some of the business. In some cases, sellers may provide a very reasonable interest rate. Some seller financing can also prompt other lenders to invest in the venture.
  • U. S. Small Business Administration. Many lenders across the country offer small-business loans guaranteed by the U.S. Small Business Administration (SBA). These loans may provide more lenient and flexible financing for qualifying borrowers.
  • Financial institutions. While the industry is still in the midst of a tight credit market, the fundamentals for loan qualification remain important. They include demonstrating positive cash flow, solid management experience, industry expertise and a strong credit report. Banking relationships are also a significant part of the equation. It is important to cultivate and maintain a relationship with your banker, keeping him/her well-informed about your business experience within a particular industry. Many banks, also have special lending programs for women-, minority- and disabled-veteran-owned businesses.

Be prepared and stay informed when seeking financing for an acquisition. It is not unusual, especially in a tight credit market, for business owners to seek a variety of lending sources.

The foregoing article is intended to provide general information about financing an acquisition and is not considered financial advice from Union Bank. Please consult your financial advisor.





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Business Loans, Acquisition Funding, Commercial Banking – Opus Bank #business #careers

#business acquisition loans

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Business Loans

Opus Bank’s portfolio of products, services and solutions are particularly well-suited to support small to mid-sized businesses with revenues from $5 million to $100 million and more. Opus Bank has commercial business banking resources to help your business grow and expand. We believe in building long-term business partner relationships, so you can count on us to be there as you grow.

​LENDING THAT MAKES SENSE

We know every business is unique, which is why our “common sense underwriting” is designed to help you capitalize on the opportunities that make sense for your business. Our Business Bankers are experts at finding the right financing solution for your business.

BUSINESS LOANS

Opus Bank has an extensive array of capital financing to help you achieve your business goals and aspirations.

  • Equipment Loans – Our Equipment Loans can help you purchase equipment, vehicles, or make capital improvements.
  • Business Acquisition Term Loans – Our Business Acquisition Term Loans can be structured to provide cost-effective financing for purchasing another business.
  • Owner-Occupied Real Estate Loans – We can help with the purchase or refinancing of an existing facility, or with the construction of a new facility through our Owner-Occupied Real Estate Loans.
  • Small Business Loans – As a Small Business Administration Preferred Lender, Opus Bank can help you secure the critical funds you need.

Financing subject to credit and collateral approval by Opus Bank





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Financing a business acquisition with debt #business #applications

#business acquisition loan

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Financing a business acquisition with debt

If you want to acquire a business but do not have the necessary funds to do so, you might want to consider raising debt against the target company to bridge the funding gap.

This idea might seem counterintuitive at the outset, but is very similar to the process of obtaining a mortgage to purchase a house. Just as a mortgage is secured against the purchased property, acquisition debt can be secured against the underlying assets of the business.

However, unlike a home, a business can generate positive cash flows that can be used to service interest costs and amortisation. By raising debt this way, the equity portion of a transaction can decrease to as little as 10-30%.

Of course, raising debt carries a level of risk. If the company suffers from financial distress and is unable to meet scheduled interest payments to debtors, the company might be forced into technical default or even liquidation.

Therefore, a transaction should be structured so that it is appropriate for the business and fits the risk appetite of the incoming owners:

The Capital Structure

A leveraged company acquisition (where the buyer uses debt in addition to cash to buy a business) is normally funded with a finance package comprising multiple elements of debt. The capital structure may include (in increasing order of seniority):

• Vendor loan (also called deferred consideration) – A debt instrument issued by the seller, where a portion of the transaction value is paid to the seller over time. This is often used to bridge a valuation gap between a buyer and seller. Terms vary

• Subordinated loan – A loan that sits behind other debt in the capital structure, meaning that interest and principal payments of other loans take priority. This form of debt is often provided by specialised subordinated lenders such as credit funds. The loan carries a higher cost of capital because of the associated risks of being junior to other debt (

10-15% interest costs)

• Senior term loan – A cash flow loan that is paid back over time, sometimes with a larger ‘bullet’ repayment at the end. Normally offered by commercial banks, finance companies, insurance companies, and investment funds. The cost of capital ranges between 4% and 8%

• Asset Based loan – A revolving line of credit secured against receivables and stock. Provided by lenders that specialise in Asset Based Lending (ABL). The cost of capital is between 4% and 8%, reflecting the high level of collateral.

Management acquisitions: MBOs, MBIs, and BIMBOs

MBOs, MBIs and BIMBOs are business acquisitions normally funded with leveraged finance.

Management buyout (MBO), Management buy-in (MBI), and Buy-in management buyout (BIMBO) refer to different processes where a management team acquires a significant stake in a company from the private owners. In an MBO the current management of the business buys out the owners, in an MBI a management team from outside the business takes control of the company, and a BIMBO is a combination of the two.

Management acquisitions are appealing to management teams because of the increased potential rewards from being owners of the business rather than employees. Their potential rewards are enhanced further by the fact that the team normally have a thorough understanding of the business they want to acquire.

Management acquisitions are also attractive to the seller. Because the management team already has full knowledge of the company available to them, certain stages of the transaction process, e.g. due diligence. can be expedited.

Thus, in the right situation, these three types of company acquisitions can drive substantial value for the buyer as well as the seller.

As you can see, there are many different ways to structure a debt driven company acquisition. Having an understanding of what types of finance are available to you, as well as the most appropriate capital structure gives you the tools to optimise your use of capital and maximise your chances of successfully acquiring a business.

This article was contributed by Dan Barrett, Director of the Corporate Debt Advisory at CreditSquare. If you want to know more, don’t hesitate to contact CreditSquare. leading experts in advising, structuring and arranging credit soultions for established small and medium sized businesses.





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Business Acquisition Financing #business #management #courses

#business acquisition loan

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Our Services

Business Acquisition Financing/Leveraged Buyouts

“It costs less to buy an existing business than to build one from the ground up,” say business experts.

That could be why, despite credit often being elusive and economic uncertainty, there seems to be increasing leveraged buyouts and merger and acquisition activity. Motivating factors include the opportunity to get into emerging markets, new geographic territory, build brands and increase profits more quickly.

Nearly 80% of companies recently surveyed anticipate at least one acquisition in the short term and, conversely, one-third of middle market firms are open to outside investors.

In today’s rigid credit market, securing bank funding can be difficult for companies or transactions that don’t fit into the bankable box.

If the target company does not have a lot of assets, positive cash flow and strong profit margins, traditional bank financing can be tough – if not impossible to find. Alternative commercial financing options are available.

Key factors to the type and availability of funding is the structure and type of the company that is being acquired and its valuation and growth plan. Acquisitions often involve different layers of capital which could include debt financing, mezzanine financing and private equity, depending on these factors.

Business Capital specializes in providing “out-of-the-box” capital solutions to fund any situation or acquisition.

If a buyer or seller is not well versed in financing, it is vital to partner with a reputable firm, like Business Capital. that understands the complexities of the situation and all the available options to determine the right source and structure of financing for each specific business opportunity.

Does your business plan include an acquisition in your future?

When considering an acquisition (and alternatives for acquisition financing), key items to deliberate are:

  • The continued growth opportunity provided by the target company
  • The acquisition financing terms
  • The purchase price

Many acquisitions that fail often do so because these factors are not carefully considered. Acquisition Financing is not “one size fits all.” Business Capital is expert in this type of complex transaction and will address each of these factors to structure and package the best solution with financing terms that are highly customized to each client’s needs; and also provide analysis of the purchase price to determine if it can be supported by the cash flow and assets of the acquisition, and falls within industry standards.

Why Business Capital?

Business Capital has been providing debt financing and restructuring services to small and middle market companies for over a decade. With a strong background in leveraged buyouts and acquisition financing, BizCap has a proven track record of successfully structuring and syndicating the optimal loan or loan combinations to quickly execute this type of transaction. We have developed solutions and are accustomed to the complexities in all areas of debt financing; we have the capacity and experience to provide, structure and coordinate event financing in all sizes, types, industries and situations. If necessary, our business debt restructuring practice can also reduce liabilities and debt to pave the way for a successful outcome.

Click on the Links below to see our recent acquisition financing, leveraged buy-out restructuring for acquisition deals:





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How to Finance a Business Acquisition #loan #for #business

#business acquisition loan

#

How to Finance a Business Acquisition

Business experts often say that it costs less to buy an existing business than to build one from the ground up. If you are an entrepreneur looking into purchasing a business, there are a few items to consider when seeking financing for the acquisition that may strengthen your viability as a loan candidate and your ability to tap into a variety of potential financing sources.

Most lenders will want to review your business plan, and you should also determine the economic status and value of the business you re considering buying. Review the financials and consider having your banker and/or trusted financial advisor also review the numbers. Ascertain the value of the business, including any equipment, real estate, inventory and other assets.

To increase your viability as a loan candidate, convey your industry expertise and any management know-how to your potential lender. Lenders look for candidates who exhibit strong potential for success after acquiring the business. Show lenders that the transition period will run smoothly, and consider keeping existing managers on staff to help ensure an easy transition. Seasoned employees can also help you learn the inner workings of the business and help secure extended contracts with existing customers.

When seeking financing, consider these lending sources:

  • Family, friends or angel investors. Lenders will likely expect the buyer to provide between 20 percent and 50 percent of the capital upfront. If you do not have the initial capital to invest in the business, consider borrowing from family and/or friends. Another option may be angel investors–wealthy individuals who make equity investments in businesses at the early stages. They typically have expertise in the fields of businesses in which they invest and can also offer their resources and contacts.
  • Seller financing. Consider asking the seller if he or she can provide financing for the sale of all or some of the business. In some cases, sellers may provide a very reasonable interest rate. Some seller financing can also prompt other lenders to invest in the venture.
  • U. S. Small Business Administration. Many lenders across the country offer small-business loans guaranteed by the U.S. Small Business Administration (SBA). These loans may provide more lenient and flexible financing for qualifying borrowers.
  • Financial institutions. While the industry is still in the midst of a tight credit market, the fundamentals for loan qualification remain important. They include demonstrating positive cash flow, solid management experience, industry expertise and a strong credit report. Banking relationships are also a significant part of the equation. It is important to cultivate and maintain a relationship with your banker, keeping him/her well-informed about your business experience within a particular industry. Many banks, also have special lending programs for women-, minority- and disabled-veteran-owned businesses.

Be prepared and stay informed when seeking financing for an acquisition. It is not unusual, especially in a tight credit market, for business owners to seek a variety of lending sources.

The foregoing article is intended to provide general information about financing an acquisition and is not considered financial advice from Union Bank. Please consult your financial advisor.





Tags : , , , , ,

How to Finance a Business Acquisition #sample #business #plans

#business acquisition loan

#

How to Finance a Business Acquisition

Business experts often say that it costs less to buy an existing business than to build one from the ground up. If you are an entrepreneur looking into purchasing a business, there are a few items to consider when seeking financing for the acquisition that may strengthen your viability as a loan candidate and your ability to tap into a variety of potential financing sources.

Most lenders will want to review your business plan, and you should also determine the economic status and value of the business you re considering buying. Review the financials and consider having your banker and/or trusted financial advisor also review the numbers. Ascertain the value of the business, including any equipment, real estate, inventory and other assets.

To increase your viability as a loan candidate, convey your industry expertise and any management know-how to your potential lender. Lenders look for candidates who exhibit strong potential for success after acquiring the business. Show lenders that the transition period will run smoothly, and consider keeping existing managers on staff to help ensure an easy transition. Seasoned employees can also help you learn the inner workings of the business and help secure extended contracts with existing customers.

When seeking financing, consider these lending sources:

  • Family, friends or angel investors. Lenders will likely expect the buyer to provide between 20 percent and 50 percent of the capital upfront. If you do not have the initial capital to invest in the business, consider borrowing from family and/or friends. Another option may be angel investors–wealthy individuals who make equity investments in businesses at the early stages. They typically have expertise in the fields of businesses in which they invest and can also offer their resources and contacts.
  • Seller financing. Consider asking the seller if he or she can provide financing for the sale of all or some of the business. In some cases, sellers may provide a very reasonable interest rate. Some seller financing can also prompt other lenders to invest in the venture.
  • U. S. Small Business Administration. Many lenders across the country offer small-business loans guaranteed by the U.S. Small Business Administration (SBA). These loans may provide more lenient and flexible financing for qualifying borrowers.
  • Financial institutions. While the industry is still in the midst of a tight credit market, the fundamentals for loan qualification remain important. They include demonstrating positive cash flow, solid management experience, industry expertise and a strong credit report. Banking relationships are also a significant part of the equation. It is important to cultivate and maintain a relationship with your banker, keeping him/her well-informed about your business experience within a particular industry. Many banks, also have special lending programs for women-, minority- and disabled-veteran-owned businesses.

Be prepared and stay informed when seeking financing for an acquisition. It is not unusual, especially in a tight credit market, for business owners to seek a variety of lending sources.

The foregoing article is intended to provide general information about financing an acquisition and is not considered financial advice from Union Bank. Please consult your financial advisor.





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