Oftentimes, when an individual seeks out a business to purchase, he or she does not typically have enough personal capital to cover the cost of purchasing the company. Buyers must locate other forms of financing in order to successfully complete a business acquisition. Fortunately, there are a variety of outlets that a buyer can utilize to find financing, depending on the type of acquisition and their current credentials. The following is a list of the most common options that a buyer may uti...

Within the M&A industry, the private equity sector contributes to a large amount of the financing for mergers and acquisitions. Private equity is made up of funds of investors, commonly referred to as limited partners, who lend money in order to obtain a return on their invested capital. Limited partners are typically wealthy business-minded individuals who invest large sums of money for extended periods of time in a Private Equity Group (PEG). The purpose of a PEG is to seek out companie...

There are a number of options for financing an acquisition. Many M&A deals will utilize an earn-out to cover a portion of the cost of the business, since it acts as an opportunity for the seller to close the gap between perceived value and actual paid value. If the business performs well for the buyer after the close, then the seller has the opportunity to earn more, contingent on certain provisions being met within the given period.  Many sellers will opt for earn-out financing when the buy...

Many people dream of the day when they can own their own business and no longer have the burden of answering to a demanding or apathetic boss, and instead have the freedom to be creative in their pursuits. However, few pursue the act of procuring an existing business because they do not believe that they have adequate capital to purchase one. Buying a business has its benefits because the business is already well-established and includes a full inventory and a consistent cash flow....

An earn-out is a type of financing in which the full payout is deferred until the acquirer verifies the financial success of the business within a predetermined period of time after the closing date. An earn-out is a practical financial tool for an instance when a gap exists between the valuation price and allotted funding from the buyer. They can also be a very valuable tool when a significant client concentration exists or when the trailing twelve month’s financials are substantially above or ...

When business owners are considering the confidential sale of their business, it is imperative that they first fully understand what selling a business truly entails, because a lack of a complete understanding can lead to disappointment. This becomes a waste of both parties’ time and money. In order to help prospective sellers avoid this problematic situation, we have provided the top five questions a seller should ask themselves when considering the sale of their company. These questions mus...

Whether you are selling your business, raising capital, or preparing your estate, an accurate business valuation is vital to taking the next step. Before the valuation begins, a business owner should understand the information which will be required. The process of determining the value of a business is no small task. Valuation is a balance of both art and science, and while the numbers will play the biggest role, presenting your company accurately and professionally will always be advantageous....

Your business is worth $10,000,000 if you’ll take $10 a day for the next million days! Once a business owner has decided to sell their business, they want to sell their business as quickly as possible. Even after they’ve partnered with a business broker and had their business appraised, it might be hard to find an interested buyer with enough money to write a check. Just like having a perfect house on the market, rarely does the buyer pay cash. By working with a business broker additional finan...

While business valuation has its roots in complicated appraisal metrics, the real world of business valuation has roots in practicality. Imagine that you were recently laid off by downsizing corporate America. You have 2 kids in college and a significant mortgage on your home. You were earning $150,000 plus bonus per year but after severance that income stream is going away. Your executive talents are great but the work place does not have a job for you at your salary expectations/needs. Enter t...