There are a lot of factors and things to consider when going through the financing phase of acquiring a business. I’ve been in the business for over 40 years and have seen a lot of things and thought a few points on the financing process might be pertinent.
Things to keep in mind about financing your business acquisition:
- When buying a business one typically arranges for the financing of the purchase with a bank; very often a local bank with ties to the community.
- It is important not to overlook the fact that an operating loan may be needed for certain times during the year. The buyer will need to work with their accountant and banker to determine when those funds will be needed and to ensure there is a strong banking relationship in place for those key times.
- In many cases, business sellers may have cash reserves to use when sales fluctuate during the year. This may not be the case with the buyer and you will need to be prepared.
Please give me a call if you are thinking about buying or selling a business and we can talk!