Finance For Business Acquisitions

A myriad of factors need to be considered prior to undertaking a business acquisition. Identifying suitable businesses, arriving at the correct purchase price, and quantifying the potential future growth of the targeted company are just a few issues that reflect the complex nature of these transactions.

Of course, value creation is the intention behind many acquisitions, but how is this achieved? Purchasing organisations might choose to:

• Provide new market opportunities and products for the acquiring company
• Acquire the technologies adopted by the new company – perhaps sustainable practices, or innovative systems
• Cost saving, economies of scale
• Attractive client base or contracts
• Achieve wider geographical coverage
• Take advantage of a high skill base within the acquired business

Sourcing the capital needed
Sourcing the best finance terms can be the most challenging aspect when acquiring a new business. With so many alternative finance routes now available, knowing where to look can be time-consuming and laborious.

Each lender will have unique requirements before they agree to fund an acquisition, and BTG is able to provide invaluable advice in selecting appropriate finance. Funders will consider the debt and asset levels of the company to be acquired, the cash flow and sales history, as well as taking into account the perceived risk of the industry in which the business operates.

Planning for acquisition
Developing a strong business plan that clearly shows how the combined companies will fare in terms of cash flow requirements and long-term growth potential, is the best way to approach the funding application process.

With the back-up of a strong advisory service to select the most promising acquisition targets, carry out extensive due diligence, and facilitate funding, business acquisition can be the launch pad for long-term growth via cost-savings and increased revenues.