This presentation is going to take a look at the financing of a business purchase. If you are selling a business it will give you a guide as to what and how buyers can fund the acquisition.

1. This presentation is going to take a look at
the financing of a business purchase.
If you are selling a business it will give you
a guide as to what and how buyers can
fund the acquisition.
There is a link at the end of this deck to
the associated blog and webinar
recording.

2. Buying (or selling) a Business
Ian Priest ACIB, MIoD

3. This session is going to take a look at the
financing of a business purchase. If you
are selling a business it will give you a
guide as to what and how buyers can
fund the acquisition

4. If you are selling a business it will give
you a guide as to what and how buyers
can fund the acquisition
It can have a major impact on you and
you need to understand and be prepared

5. The terms you agree will to a greater or lesser
degree involve risk to you,
and to the seller
It’s a sliding scale and you both have to agree
and understand where you are on that scale

6. Shares or Assets
As a seller the best place to be is
selling shares
As a buyer the best place to be
is buying assets

7. Buying shares you get the company and all its
history. A VAT investigation 3 months after you
purchase can look back over several years and the
bill lands up with you!
Buying assets – you pay a fixed price
for certain assets and accept certain
liabilities

8. Experience
Before you even think about raising
finance the first question is have you
got the skills knowledge, experience,
track record to be able to run the
business successfully

9. Raising finance
The first area of funding is you /what can you bring
to the table.
Have you got savings
Have you got equity in property you can release
Have you got friends / family that can help
You need a good stake – banks call it HURT money
it needs to be at least a years salary if not more –
sufficient so you are unlikely to throw the towel in
easily because it “hurts” too much to loose that
amount

10. How can the vendor help you fund the
purchase
How much of the purchase price has to
be paid on day 1 and how much can be
“deferred” and paid over 3-5 years?

11. What can you raise out of
the business you are
Buying

12. This is the bit that scares
vendors – they are leaving
money in as deferred and seeing
the assets of the company being
pledged as security

13. Company assets
Cash in the bank 100% available to fund the deal
Bricks and Mortar – 70% over 15-20 years
Plant and machinery – 30-50% on asset finance over
3-5 years
Debtors 80-90% of debtors under 90 days on a
revolving basis

14. Profitability
You may be able to borrow against
future profitability – cash flow
lending
A short term loan 3-4 years based
on future cash generation – this
needs provable sustainable
income streams

15. forecasts
Lenders will want to see sensible /
justifiable projections normally a 3
way integrated forecast of profit and
loss, cash flow and balance sheet
This is a job for an accountant and they
need to be stress tested

16. Due diligence
In addition to any due diligence you may do the lenders will
want DD from people they can rely on
Legal – sale and purchase agreement / property title/
employment contracts / customer and supplier contracts /
legal obligations / pending claims / patents and Intellectual
property
Financial – robustness of forecasts / historic figures / HMRC
records

17. BizSmart aims to help business owners of small and medium sized businesses to create
value and scale their businesses through sound practical business support by providing
insight, Clarity combined with a real determination to help you succeed.
You can access webinars and presentations like this and more besides through our
SmartRoom service here
You can read the associated blog and listen to a live recording of this presentation by
clicking here
You can read Ian’s profile here

18. •Need a sounding board for your ideas?
•Need to know what to prioritise?
•Want someone to challenge your assumptions?

19. BizSmart –
Where Smart people go to surround themselves with other Smart
people, to gain business success.www.biz-smart.co.uk