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How To Finance Your Business Acquisition?

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Lots of people fantasize about becoming an entrepreneur and own a business.  While you can have your own business by starting one from the scratch, you can also buy an already existing business from the well-known marketplaces like Business for Sale Ontario where you can get the best sale offers.However, many people do not usually consider the idea of buying due the reason that they believe it will take a lot more money to buy a business than what they have. What they don’t know is that there are several ways that they can finance their acquisition successfully. On marketplace called Business for Sale Ontario, you will find a number of sellers who don’t mind if buyers use different method of payment to pay the price of the business.

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The following are some of the methods that can help you finance your business acquisition:

Acquire your business with Seller financing

Seller financing is one of the easiest method to obtain finance for the business acquisition. In this method, the acquisition is financed by the business seller. In Seller financing, the present owner or the seller of a business provides the buyer with a loan to the pay a part of the total purchase price. They buyer initially makes a down payment andthe outstanding amount is paid to the seller in instalments. Seller financing is a very convenient and fastest method of attaining finance for business acquisition and finalize the deal.

Bank Loan Financing

Bank Loan is another method using which you can finance your acquisition. Banks will want do an assessment of your business acquisition plan, and evaluate the value and financial standing of the business you are planning to buy.If the business you want to acquire has several assets, steady cash flow and high profit growth, the buyer can apply for a bank loan. However, if you want to acquire a business that is working in service industry, it may be a little difficult to obtain finance as compared to the other businesses. The service businesses havemanyaccounts under receivables and short-term assets, which can make it difficult for you to receive loan from a bank.

Fixed Asset Financing

When you acquire an already existing business, with that business you also buy all the fixed and current assets of that business. You can take the loan from a bank or any other similar financial institution against the fixed assets of business you are planning to buy.

Get added funds from equity investors

You can raise the funds from venture capitalist. Depending upon your plans and the value of the business you want to acquire, you can raise the funds from investors in exchange of a certain percentage of shares in the ownership of the business. By investing the significant amount of capital in your new business, the investorsmay become the major shareholder in the business you will acquire.

Mezzanine Funding

Another way of financing your business acquisition is Mezzanine Financing. Mezzanine Funding or Financing is a combination of debt and equity financing. It provides the moneylender with the right to convert the debt to an ownership or equity interest in the company in the event of non-payment, after the other older senior moneylenders are paid.

Depending upon your requirement for funds, value of the business you want to acquire, you can choose the method you want to use in order to fund your business acquisition. However, to avoid any kind of complication in future you can take the help of advisors for instance your banker, auditoror a business brokerwho can provide with importantguidance on which method to choose finance your acquisition. If you want any information about buying a business or  any other matter related to it, you can go to Business for Sale Ontario for more details.

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