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Digg it UP - Creative Ways to Finance a Business Purchase
Another morning of job hunting lies ahead of you. You pour a cup of coffee and open the paper to the employment section. With a mixture of anticipation and desperation you pick up a stub of pencil and prepare to target and identify some possible job opportunities.There are less ads to circle this morning and despite the promising words and vague descriptions you have begun to believe that none of these potential employers will seriously consider you. Perhaps they have family or friends or maybe you'll hear once again "I'm afraid you're overqualified for this position".After making a few phone calls you try to get into a positive frame of mind. You head out the door, a folder of resum
* Pursue as much seller financing as possible
* Defer the down payment portion as long as you can
* Assume more or other liabilities not originally in the purchase contract
* Negotiate a value for a buyer’s personal check put in escrow
* Let the seller retain all receivables
* Discount liabilities due the company for immediate cash payment
* See if the business intermediary will finance their transaction commission
* Assume seller’s personal debt’s or liabilities
* Negotiate extended payment terms with key suppliers
* Inventory all primary materials on consignment terms
* Finance all acquisition fees involved in the transaction; consultants, CPA, etc
Professional business buyers who have faced a “challenge” like this in their career will tell you that it is no fun being in a situation like this, but they’ll always refer to it as “worth it” when, over time, the anticipated business performance came to fruition and more than justified the initial level of financial risk leveraged to “do the deal”. They rarel
Dictionary definitions of grievance are:• Grounds for complaint• A cause of grief• DistressA grievance might originate from any one of a number of sources. As a manager, you need to be able to listen actively to grievances. It will help if you appreciate the following key facts.Key Facts About GrievancesGrievances are often below the surface – they are the moans and groans that provide fodder for the grapevine. They are the hygiene factors of the Hertzberg view of motivation: those issues that need to be cleaned up to maintain a sense of order.They include such items as:• Working conditions• Supervision• Interpersonal relat
Pursuing a viable company to purchase is a very competitive process. Money is often the most critical weapon a business buyer has to differentiate themselves from all the other business buyers who are also fortunate enough as you to have found the same great business acquisition candidate as you have. If you don’t have the funds to compete in the business acquisition market place, you will quickly become a consequential example of the old mergers and acquisition industry adage, “No dollars, no play, no deal!”
Most seasoned business buyers will tell you that they are not always looking for “a deal” in a business acquisition, but to purchase a company for reasonable terms that offers a consistent, high return on investment, with little or no buyer competition.
Astute business buyers focus on leveraging their investment dollars first and foremost, seeking to acquire controlling interest in a viable company for the least amount of their own money. Business purchase terms can be very diverse, as can means to finance a deal. Terms of purchase are often perceived by both the business seller and buyer as the most critical link to their eventual purchase agreement, much more so than just purchase price.
Sometimes You Have to get “$ Creative”
When you find an extraordinary business acquisition opportunity that initially exceeds your current financial wherewithal, you need to be get very creative and resourceful, very quickly, to be able to achieve your desired outcome. Again, your objective is to negotiate and finalize a reasonable purchase contract with the business seller, using as much of his or his company’s money, or anybody else’s money you can secure and still maintain management control of the company post purchase.
There are four fundamental areas a savvy business buyer can pursue to attempt to get the necessary funds to finance controlling purchase of a profitable company acquisition:
Business Buyer Personal Funds:
* Cash Savings
* Liquidate paper investments
* Negotiate a private party loan from a friend or family member
* Advances from personal credit cards or negotiated delays in outstanding credit card balance payments
* Obtain a bank loan secured with high value, personal assets, like your home or car(s)
* Negotiate payment delays on buyer’s current outstanding bills
* Barter or trade significant equity positions in personal assets for required business assets
Take on Partners:
* Aggressively pursue a minority ownership partnership with the current owner
* Bring in a trusted new partner – sell him shares in the company
* Sell shares of the company to existing employees
* Sell shares of the company to existing company vendors or suppliers
* Sell shares of the company to other business buyers
Pursue Every Funding Source:
* Include, increase, the earn out portion from the company’s future earnings
* Sell revenue participation certificates (Bank collects/ disburses funds)
* Bank loan to the business
* Asset loan to the business
* Loan from current business supplier(s) or vendor(s)
* Finance or sell off all existing excess inventory in the company
* Sell high value assets and lease them back or finance them
* Sell high value equipment outright and time share or borrow other like equipment
* Accelerate company receivables
* Factor company receivables
* Seek customer deposits against existing orders
* Lease a high value asset and get advance lease payments from the lessee
* Sell excess or low use assets
* Sell the company customer list
* Sell on-business-premise concession space
* Sell the parking lot land
* Sell trademarks or unused licensing rights
* Sell or sublet the part of the business building and get advance payments
* Sell “junk” or obsolete inventory accumulated for cash
Reconfigure Outstanding Business Purchase Balance Arrangements
* Pursue as much seller financing as possible
* Defer the down payment portion as long as you can
* Assume more or other liabilities not originally in the purchase contract
* Negotiate a value for a buyer’s personal check put in escrow
* Let the seller retain all receivables
* Discount liabilities due the company for immediate cash payment
* See if the business intermediary will finance their transaction commission
* Assume seller’s personal debt’s or liabilities
* Negotiate extended payment terms with key suppliers
* Inventory all primary materials on consignment terms
* Finance all acquisition fees involved in the transaction; consultants, CPA, etc
Professional business buyers who have faced a “challenge” like this in their career will tell you that it is no fun being in a situation like this, but they’ll always refer to it as “worth it” when, over time, the anticipated business performance came to fruition and more than justified the initial level of financial risk leveraged to “do the deal”. They rarely
Business is slow, you are not doing as well as you hoped, want to build your business very quickly? Yup we all do. Have you thought about over delivering? Give your customers more that they thought they were getting, offer them a better deal, great service and see what happens?What about my profit I hear you say. Well profit is money in minus costs of providing your sales. Well if you get more sales and manage your costs then your profit is going up as well. Think of the ripple effect when you throw a stone into a lake – it spreads out. So treat your customers well and they will not only come back but they will bring their friends and acquaintances as well. Put your company in front of yo
Astute business buyers focus on leveraging their investment dollars first and foremost, seeking to acquire controlling interest in a viable company for the least amount of their own money. Business purchase terms can be very diverse, as can means to finance a deal. Terms of purchase are often perceived by both the business seller and buyer as the most critical link to their eventual purchase agreement, much more so than just purchase price.
Sometimes You Have to get “$ Creative”
When you find an extraordinary business acquisition opportunity that initially exceeds your current financial wherewithal, you need to be get very creative and resourceful, very quickly, to be able to achieve your desired outcome. Again, your objective is to negotiate and finalize a reasonable purchase contract with the business seller, using as much of his or his company’s money, or anybody else’s money you can secure and still maintain management control of the company post purchase.
There are four fundamental areas a savvy business buyer can pursue to attempt to get the necessary funds to finance controlling purchase of a profitable company acquisition:
Business Buyer Personal Funds:
* Cash Savings
* Liquidate paper investments
* Negotiate a private party loan from a friend or family member
* Advances from personal credit cards or negotiated delays in outstanding credit card balance payments
* Obtain a bank loan secured with high value, personal assets, like your home or car(s)
* Negotiate payment delays on buyer’s current outstanding bills
* Barter or trade significant equity positions in personal assets for required business assets
Take on Partners:
* Aggressively pursue a minority ownership partnership with the current owner
* Bring in a trusted new partner – sell him shares in the company
* Sell shares of the company to existing employees
* Sell shares of the company to existing company vendors or suppliers
* Sell shares of the company to other business buyers
Pursue Every Funding Source:
* Include, increase, the earn out portion from the company’s future earnings
* Sell revenue participation certificates (Bank collects/ disburses funds)
* Bank loan to the business
* Asset loan to the business
* Loan from current business supplier(s) or vendor(s)
* Finance or sell off all existing excess inventory in the company
* Sell high value assets and lease them back or finance them
* Sell high value equipment outright and time share or borrow other like equipment
* Accelerate company receivables
* Factor company receivables
* Seek customer deposits against existing orders
* Lease a high value asset and get advance lease payments from the lessee
* Sell excess or low use assets
* Sell the company customer list
* Sell on-business-premise concession space
* Sell the parking lot land
* Sell trademarks or unused licensing rights
* Sell or sublet the part of the business building and get advance payments
* Sell “junk” or obsolete inventory accumulated for cash
Reconfigure Outstanding Business Purchase Balance Arrangements
* Pursue as much seller financing as possible
* Defer the down payment portion as long as you can
* Assume more or other liabilities not originally in the purchase contract
* Negotiate a value for a buyer’s personal check put in escrow
* Let the seller retain all receivables
* Discount liabilities due the company for immediate cash payment
* See if the business intermediary will finance their transaction commission
* Assume seller’s personal debt’s or liabilities
* Negotiate extended payment terms with key suppliers
* Inventory all primary materials on consignment terms
* Finance all acquisition fees involved in the transaction; consultants, CPA, etc
Professional business buyers who have faced a “challenge” like this in their career will tell you that it is no fun being in a situation like this, but they’ll always refer to it as “worth it” when, over time, the anticipated business performance came to fruition and more than justified the initial level of financial risk leveraged to “do the deal”. They rarel
I remember it all so well. The dot-com had just dot-bombed, the stock market was suffering from a sucker punch to the throat, and we were beginning to hear about some guy named Ken Lay. A little while later, news came out about Arthur Andersen, WorldCom, and Adelphia, among others. It seemed that companies were going under and CEOs were getting indicted faster than you can say ‘stock option’. And then came the layoffs. Thousands upon thousands began losing their jobs on a regular basis. We started hearing about places overseas that were getting all kinds of work from US companies.I’m pretty sure that most everyone has heard that many jobs have been ‘outsourced’ through something called ‘off-sh
Business Buyer Personal Funds:
* Cash Savings
* Liquidate paper investments
* Negotiate a private party loan from a friend or family member
* Advances from personal credit cards or negotiated delays in outstanding credit card balance payments
* Obtain a bank loan secured with high value, personal assets, like your home or car(s)
* Negotiate payment delays on buyer’s current outstanding bills
* Barter or trade significant equity positions in personal assets for required business assets
Take on Partners:
* Aggressively pursue a minority ownership partnership with the current owner
* Bring in a trusted new partner – sell him shares in the company
* Sell shares of the company to existing employees
* Sell shares of the company to existing company vendors or suppliers
* Sell shares of the company to other business buyers
Pursue Every Funding Source:
* Include, increase, the earn out portion from the company’s future earnings
* Sell revenue participation certificates (Bank collects/ disburses funds)
* Bank loan to the business
* Asset loan to the business
* Loan from current business supplier(s) or vendor(s)
* Finance or sell off all existing excess inventory in the company
* Sell high value assets and lease them back or finance them
* Sell high value equipment outright and time share or borrow other like equipment
* Accelerate company receivables
* Factor company receivables
* Seek customer deposits against existing orders
* Lease a high value asset and get advance lease payments from the lessee
* Sell excess or low use assets
* Sell the company customer list
* Sell on-business-premise concession space
* Sell the parking lot land
* Sell trademarks or unused licensing rights
* Sell or sublet the part of the business building and get advance payments
* Sell “junk” or obsolete inventory accumulated for cash
Reconfigure Outstanding Business Purchase Balance Arrangements
* Pursue as much seller financing as possible
* Defer the down payment portion as long as you can
* Assume more or other liabilities not originally in the purchase contract
* Negotiate a value for a buyer’s personal check put in escrow
* Let the seller retain all receivables
* Discount liabilities due the company for immediate cash payment
* See if the business intermediary will finance their transaction commission
* Assume seller’s personal debt’s or liabilities
* Negotiate extended payment terms with key suppliers
* Inventory all primary materials on consignment terms
* Finance all acquisition fees involved in the transaction; consultants, CPA, etc
Professional business buyers who have faced a “challenge” like this in their career will tell you that it is no fun being in a situation like this, but they’ll always refer to it as “worth it” when, over time, the anticipated business performance came to fruition and more than justified the initial level of financial risk leveraged to “do the deal”. They rarel
Boat detailing requires hard work and to make a run at the local marina market you need a strong customer base. Of course many people rarely come out to visit their boats and the chances of you getting a personal meeting are not so common as you might like.When business is great you are busy working and do not have time to solicit new business and yet you need to run around the marina on a busy weekend day and hand out your business cards, flyers, brochures and floatable key chains with logo to give to potential customers.You see what you really need is a strong presence and allow the power of that presence to rule the local market for you. You can achieve this; how so you ask? Well, you need
* Sell revenue participation certificates (Bank collects/ disburses funds)
* Bank loan to the business
* Asset loan to the business
* Loan from current business supplier(s) or vendor(s)
* Finance or sell off all existing excess inventory in the company
* Sell high value assets and lease them back or finance them
* Sell high value equipment outright and time share or borrow other like equipment
* Accelerate company receivables
* Factor company receivables
* Seek customer deposits against existing orders
* Lease a high value asset and get advance lease payments from the lessee
* Sell excess or low use assets
* Sell the company customer list
* Sell on-business-premise concession space
* Sell the parking lot land
* Sell trademarks or unused licensing rights
* Sell or sublet the part of the business building and get advance payments
* Sell “junk” or obsolete inventory accumulated for cash
Reconfigure Outstanding Business Purchase Balance Arrangements
* Pursue as much seller financing as possible
* Defer the down payment portion as long as you can
* Assume more or other liabilities not originally in the purchase contract
* Negotiate a value for a buyer’s personal check put in escrow
* Let the seller retain all receivables
* Discount liabilities due the company for immediate cash payment
* See if the business intermediary will finance their transaction commission
* Assume seller’s personal debt’s or liabilities
* Negotiate extended payment terms with key suppliers
* Inventory all primary materials on consignment terms
* Finance all acquisition fees involved in the transaction; consultants, CPA, etc
Professional business buyers who have faced a “challenge” like this in their career will tell you that it is no fun being in a situation like this, but they’ll always refer to it as “worth it” when, over time, the anticipated business performance came to fruition and more than justified the initial level of financial risk leveraged to “do the deal”. They rarel
According to the U.S. Census Bureau, there are more than 10 million self-employed workers in the United States and that number is increasing - for good reason. Being your own boss means not worrying you'll be laid off or fired. It allows you to create your own work schedule. It holds out the promise of great financial reward. It frees you from having to attend mind-numbing staff meetings. In short, self-employment lets you call the shots.Being your own boss is not, however, without significant challenges. Potential concerns include, but are not limited to: Lack of financial security or predictabilityIsolation from peers or co-workersLack of clarity a
* Pursue as much seller financing as possible
* Defer the down payment portion as long as you can
* Assume more or other liabilities not originally in the purchase contract
* Negotiate a value for a buyer’s personal check put in escrow
* Let the seller retain all receivables
* Discount liabilities due the company for immediate cash payment
* See if the business intermediary will finance their transaction commission
* Assume seller’s personal debt’s or liabilities
* Negotiate extended payment terms with key suppliers
* Inventory all primary materials on consignment terms
* Finance all acquisition fees involved in the transaction; consultants, CPA, etc
Professional business buyers who have faced a “challenge” like this in their career will tell you that it is no fun being in a situation like this, but they’ll always refer to it as “worth it” when, over time, the anticipated business performance came to fruition and more than justified the initial level of financial risk leveraged to “do the deal”. They rarely mention however, that trying to get all parties to agree to your finance limitations and loan terms, in rapid fashion, simultaneously, can be hazardous to your health! It’s worth a shot, don’t you think?
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