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Planning a Business Acquisition?

Anticipating a Business Acquisition

Acquiring another business can make good sense in many situations. The target firm might be a competitor, a complementary business or a company with core technology, customer base or products that would help your business. Understanding both your motivation and the sellerís can help you negotiate an acceptable deal.

Check your financing options
Once youíve decided to buy another company, the next question is usually how to finance it. The solution is often to piece together financing from a variety of sources. These may include:

Your personal equity. Youíll have to decide how much capital youíre able to risk, but this is a good starting point because it starts the ball rolling. Itís a positive influence on other investors or lenders to participate.

Seller financing. Some sellers prefer to finance a portion of the selling price; others will do so reluctantly. Terms offered by sellers are usually more flexible and favorable to the buyer than those from an outside lender. Having the seller participate in the financing also makes the deal more attractive to third-party lenders.

Venture capital. Professional venture capitalists are generally more comfortable with risk; however, they may want majority control.

SBA loans. The U.S. Small Business Administration Loan Guarantee Program offers favorable financing terms to qualified business buyers. SBA loans typically have long amortization periods and can be used to finance a hefty chunk of the sale price.

Talk to the Experts 
With a variety of potential financing options available, you must be open to creative solutions and willing to take some risks. Talk with an experienced business banker at MutualBank. Weíre here to help you reach your business goals. Go ahead...live a better life!

Contact a Representative Today

Back to Education Resources

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Planning a Business Acquisition?

Anticipating a Business Acquisition

Acquiring another business can make good sense in many situations. The target firm might be a competitor, a complementary business or a company with core technology, customer base or products that would help your business. Understanding both your motivation and the sellerís can help you negotiate an acceptable deal.

Check your financing options
Once youíve decided to buy another company, the next question is usually how to finance it. The solution is often to piece together financing from a variety of sources. These may include:

Your personal equity. Youíll have to decide how much capital youíre able to risk, but this is a good starting point because it starts the ball rolling. Itís a positive influence on other investors or lenders to participate.

Seller financing. Some sellers prefer to finance a portion of the selling price; others will do so reluctantly. Terms offered by sellers are usually more flexible and favorable to the buyer than those from an outside lender. Having the seller participate in the financing also makes the deal more attractive to third-party lenders.

Venture capital. Professional venture capitalists are generally more comfortable with risk; however, they may want majority control.

SBA loans. The U.S. Small Business Administration Loan Guarantee Program offers favorable financing terms to qualified business buyers. SBA loans typically have long amortization periods and can be used to finance a hefty chunk of the sale price.

Talk to the Experts 
With a variety of potential financing options available, you must be open to creative solutions and willing to take some risks. Talk with an experienced business banker at MutualBank. Weíre here to help you reach your business goals. Go ahead...live a better life!

Contact a Representative Today

Back to Education Resources

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