A guide to purchase finance
When you have been running a successful business for a number of years, your thoughts might naturally turn to ways of furthering that success.
One such way is to buy another business already operating in a similar area – the business you buy comes ready-made, with an existing customer base, and the infrastructure necessary for trading more or less immediately. There is the additional advantage that by purchasing a related business, you are able to reduce the competition that the rival enterprise might have posed.
In order to conclude any such a buy-out, of course, you are likely to need the purchase finance to enable you to do so.
Why you may need purchase finance
Whilst the case for expanding your business through the acquisition of a similar or rival business might be easily made, carrying out such a decision requires the financial wherewithal to do so.
This is the purpose of purchase finance, with any lender likely to take a close, detailed interest not only in the current health and future viability of your own business but also the financial standing of any business you have an interest in acquiring.
Types of finance available
There are a number of sources of purchase finance, but two in particular may bear closer examination:
- equity release is a familiar concept for homeowners wanting to release the equity in a home they have lived in for some time, that has therefore increased in value, and the mortgage has been paid off;
- equity release may be just as effective way for a business to release the cash tied up in the equity of commercial premises that have been owned for some time
- the funds released in this way may be used as purchase finance for the acquisition of another or other businesses;
- business angels are individuals who choose to use some of their accumulated wealth to invest in small and medium sized businesses;
- typically, business angels may be drawn towards investment in start-up ventures, rather than those looking to purchase other businesses – with an estimated 18,000 business angels currently at work in the UK, however, you may stand a good chance of attracting such an investor;
- a business angel typically makes an investment in your business in return for an equity share in it – so you may need to be prepared for some business angels to play a more active part in decision-making within your business.
Why use ACF?
Here at ACF Direct we have developed close working relationships with both equity release providers and a number of business angels – not to mention many other potential sources of the purchase finance you need.
To find out more and to pursue your options for purchase finance, you might want to complete our brief online enquiry form or contact us by telephone or via email to discuss your plans in more detail with us.