Why is it important for our viewing audience?
I think this is an important topic because people don’t understand the use cases for acquisition financing, they think it’s a narrowly defined type loan that they use to buy a business but they don’t understand what it can be used for in a more Dynamic acquisition and growth context and it it’s important for buyers to have the right information about how to use acquisition financing before they start.
What are the top three uses for acquisition financing?
Well, I would say it really comes down to like there’s a single acquisition where one company’s going to buy another company or an individual is going to buy a company so they’re only going to do one acquisition so a single acquisition that would be the number one use the Second Use would be a series of Acquisitions called a rollup where there’s continuous acquiring that goes on over a period of time in order to scale up and the third is where you’re doing the continuous rolling up but you’re also adding growth investment into the into the scenario so that you’re not only growing through acquisition but you’re also investing in other products and other services and other offices so I think it’s you know the one the rollup or the dynamic one where you’re adding growth Capital to the rollup scenario so I think those are the top three use cases.
How does each use case help a buyer?
I think it’s important for buyers to know that when they are closing their first deal that if they think about doing additional Acquisitions that they can set up their loan structure so that they have access to that financing on the front end and I also think it’s important and it really benefits a buyer for them to know that that lender who’s going to give them the money for the acquisition will also give them money for growth Capital so if you want to do something different with the business when you buy it using their Capital you can also ask them for the money in order to invest in the business because that really creates a whole another level of growth that most buyers want and so you can get the money from the same lender you just have you have to know how to ask for it.
Can you actually raise growth capital from an acquisition financing lender?
You can and that’s an important Point because it’s not just a lot of people think that you can’t do growth capital and acquisition Capital through 100% through a lender but if you have a business with some value in it and you’re rolling that existing Equity value into the new acquisition you usually if the if the numbers work out properly you can get 100% financing and we’ve had some tremendous growth stories and acquisition stories with attract Capital clients that have done just that they haven’t brought in money from investors but they’ve been able to get the growth capital and acquisition financing 100% from A lender so it is a powerful approach.