Arguably one of the most difficult forms of financing to secure is business acquisition financing.
The degree of difficulty has a lot to do with the fact that many business acquisitions of small and medium sized businesses fail after the change of control takes place, making financiers more Leary of this type of business financing request.
But don’ t despair if you’re in the process of trying to locate and secure capital for an acquisition. Financing is available and there is a solution for making sure that you get your hands on the money you need.
Simply put, you need to make sure that you’re focused on the details of the deal.
A lender or investor considering advancing capital for a business acquisition want to see that all change of control issues are properly addressed, all risk areas are covered off, and that there is a solid plan of action going forward led by a well informed and competent individual(s).
Basically, they really are going to get into the details.
And so on, and so on, and so on.
Basically, the details. Could be just a few… likely more in the line of several pages.
And in many cases, potential financiers are asking you to provide your due diligence assessment of all the things you should be worried about anyway regarding the proposed purchase, which can actually be viewed as a good thing.
After all, no buyer wants to invest their hard earned money and time on a failed venture. While there is never a guarantee of success as anything can get screwed up or get blind sided by unexpected events, covering off the obvious issues right in front of you is a good starting point on the road map to success.
Unfortunately, many prospective buyers don’t sweat the details and at times want to dive right in where angels fear to trend. And that’s exactly why they don’t get any financing.
The details can be a real pain. It takes time to deal with. It costs money to work with qualified advisors.
But the risk of not sweating even the smaller stuff can be catastrophic in nature when you’re trying to take on a business that you have never operated and will have much to learn about in the early going of ownership