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Business Acquisition – Buying a Company – How to Finance
The prospect of buying an established business can be highly exciting and potentially very rewarding. However the process can be fraught with issues and problems that you may not have considered. In the excitement of thinking about the potential of the acquisition or purchase of a business there are countless issues that need to be researched and considered in detail before making any offer of interest or actual business acquisition offer.
Not only is there the complex and sometimes lengthy process of due diligence to verify the financial and performance claims of the business in question, there is also the issue of raising finance to purchase a business.
Finance AVAILABLE For Buying A Business
There is an element of which comes first when looking to acquire a business, the funding or the due diligence. Most people will have an indication of the value of a business and informal discussions should have taken place regarding this at an early stage. The capacity to be able to fund the business acquisition is the major hurdle to cross for many and it is worth starting the research at an early stage.
CBS Finance are experts in sourcing the perfect acquisition finance lender. Criteria for borrowing in this sector can be complex as there are many options available, and lending criteria is in a constant state of change. Opportunities for acquisition funding include a potential business loan if there is an existing business that is looking to make the acquisition as well as other options. Secured and unsecured loans may be available as well as private equity opportunities. In some instances there may also be access to Government Grant funding.
Why Not Just Use A Commercial Bank For Acquisition Funding?
CBS Finance work with many lenders but as a responsible broker it is our job to match the very best funding to your bespoke requirements. Many people looking to buy a business would simply contact their business bank to discuss opportunities but in many instances this can be an expensive and protracted process. There are many other opportunities available for MBO and MBI company acquisitions that we can help you consider before committing.
Having the available funding in place potentially puts you in a far stronger bargaining position when you actually begin to negotiate the minutiae of the business purchase.
Contact CBS Finance for impartial and professional advice today.
Q. How can I finance a small business acquisition?
A. Business acquisition finance is a financial product specifically tailored towards business acquisitions and mergers.
Q. How do I apply for business acquisition finance?
A. Most lenders will require a deposit of between 10 and 25%. You will need a solid business plan and a good personal credit rating.
Q. What are the advantages of business acquisition?
A. Business acquisitions offer a number of advantages over traditionally growing a business. Examples include access to larger markets via the acquired business’ clients and potentially improved supplier rates and terms through increased volume.
Q. Why choose acquisition finance over traditional loans?
A. Acquisition finance can be faster to access than many forms of traditional finance. Traditional bank lending may need to see evidence of a steady revenue stream, valuable assets and sustained profits from the business that is going to be acquired and this may not always be available.
Q. What is the process of business acquisition?
A. The process of business acquisition can be lengthy and complex and requires a number of specialist skills. Identifying targets is often the easy part. Due diligence needs to be carried out at the most detailed level in all areas of the business before any decisions are made. Financial health, projections and funding required are all essential elements of the process.
Q. What is ‘Due Diligence’ when acquiring a company?
A. Due diligence is the process of checking out all elements of the business that is being considered for acquisition. Examples of this include financial health checks, advance orders, current work in progress, cash in bank, work invoiced etc. There is also a much deeper understanding that is required during the process of business acquisition that include things like property ownership or rental, terms of lease, staff costs and pension commitments. Professional help is highly recommended to cover all areas that are required.
Q. What is the difference between a company acquisition and a merger?
A. A company merger usually describes the merging of two businesses into one for the benefit of both. These benefits can include efficiencies in delivering of service to a larger customer base, more competitive supplier rates due to increased buying power and an enhanced market position. Company acquisitions generally refer to the full take-over of one business by another.
Glossary of Terms