Business Acquisition Financing with Pacific Business Lending
Securing capital and the best financing terms for an acquisition is not easy. While the economy has stabilized over the last few years, lenders are still reluctant to fund small business acquisitions.
Many traditional lenders have modified their lending criteria, restricting available credit and flow of capital to SMEs. In a $1 million transaction, initially, the buyer would expect to have 10% down with the seller also holding 10% in seller financing, such that the lending institution covered nearly 80% of the purchase price. That is no longer the case. Banks and most other lenders are now financing 50% or less of the purchase price.
This can be really frustrating for businesses hoping to quickly acquire another business as part of their growth strategy. When lenders are giving so little money, it becomes very difficult to tie down deals as fast as you would wish. In some cases, you may even miss out altogether.
How we can help
When you find yourself in such a situation, Pacific Business Lending can help in a number of ways;
- Help determine if the business you’re buying is priced right
In a typical acquisition, you (the acquiring firm) are required to pay a market price plus a premium. A firm’s market price is determined by an efficient financial market that makes use of every useful information to value stock prices. We will make sure that all details have been considered and that the market price truly reflects the acquired firm’s market value.
- Help assess the entity’s cash-flow to determine if it’s worthwhile
The premium (mentioned above) is an additional amount you pay above the efficient stock price. In a good deal, you must be sure that the acquisition will generate more value than that premium. This can only be determined through an in-depth analysis of the company’s cash-flow. We can help you determine what exactly you can expect from the acquired entity based on its current cash-flow.
- Financing the purchase
We also help in raising funds needed for the actual acquisition, keeping your cash requirements to a minimum. This we do by leveraging the existing assets to the maximum amount. If you need $1 million for the acquisition, we’ll make sure that you get as close to that amount as possible.
- Providing equity if need be
Finally, if the acquisition funds raised are not enough to close the deal, we will go a step further and provide the shortfall so you don’t have to miss out on the deal.
Get acquisition financing today
Contact Pacific Business Lending for a FREE evaluation of your financing needs and let’s help you get the funds for that acquisition.