Facts About Business Acquisition Financing
Financing the acquisition of a business is not difficult for buyers who are buying businesses which have financial records which show that the buyer is likely to have enough cash flow from the business, based on the business’ historical cash flow, to service the debt (principal and interest payments) of the acquisition loan the buyer will use to buy the business.
Obtaining financing for an acquisition is easy if the buyer doesn’t rely on projections/proforma’s to justify the acquisition. Projections of future cash flow are acceptable to use in the loan packet, but the justification for the loan needs to be based on the historical cash flow of the business being acquired, without growth of that business.
Projections are necessary in arranging financing for start up businesses, since there is no historical cash flow. In start ups, the buyer’s Business Plan is a critical part of the loan request package.
Over 80% of the buyers of the thousands of businesses listed and sold by ABMI over the last 28 years used financing sources introduced to the buyers by ABMI agents/consultants/advisors, taking advantage of ABMI’s Free Financing Discovery Services.
Currently buyers will be required to invest 20% to 25% of the total purchase price of the business, as a down payment, on the non-real estate assets being acquired. Buyers may invest 10% on business real estate being acquired.
ABMI has one of the USA’s most extensive, up-to-date data bases of available lending institutions, allowing our agents to stay “on the cutting edge” of information about which lenders are most likely to approve the various loans available to small business buyers.