Posted on: October 8th, 2018
Achieving business growth takes bold ideas, exacting execution and capital support. Many companies are more proficient with strategic planning and execution than they are with bringing in capital.
Capital raising is a whole new ballgame that many have only a passing familiarity with. If you’ve grown through cash flow, then you’ve never had to learn about it.
Yet when big growth steps present themselves such as a strategic acquisition, there can be a large gap between what your local banker can fund, and the total acquisition proceeds required.
This can cause internal anxiety for management as they are usually not enthusiastic about bringing in equity investment – the traditional way to fill this type of gap. Acquisitions can also be thought in a more abstract way as a dramatic scale-up of the size of the operation.
There are many positives from pursuing a sensible scale-up, as you gain greater size, diversification, and market presence. All these things make your business stronger and give you more levers to continue to drive the growth of your business.
The key is to ensure you have acquisition financing options in place, to fund your scale-up acquisition. Like most things in life, knowing you have something in your back pocket that you can rely on gives you a sense of stability and greater confidence.
With more decision making confidence, you are likely to negotiate a better deal. With capital behind, you’re likely to discover more ways to grow and pursue expansion paths more aggressively.
Having the right acquisition financing lender behind you not only gives you money, but gives you the freedom and power to pursue bigger and better growth initiatives, whatever they happen to be.
Today’s debt markets are flush with lenders who are looking to lend to ambitious companies with sensible acquisition strategies. Here are our three different types of lenders that may be a good match to fund your next acquisition.
- Private debt funds – these funds are more flexible and cash flow oriented than banks, and can provide acquisition lines to help you scale into the future.
- Mezzanine funds- these funds are like having an investor but you pay them with interest instead of with shares. They are great long term lenders and a tried and true patient supplier of capital.
- Regional & Community Banks – many of these banks are looking to beef up their C&I loan portfolios and are providing cash flow based loans to credit worthy companies.