New entrepreneurs are often torn between buying an existing business and launching a new company from scratch. The decision is not simple because buying an established business has both advantages and disadvantages. Advantages of buying an established business In most cases, buying an existing business is a safer option than starting a new company. Furthermore, […]
Leveraged Buyouts (LBO)
Buying a Business? How to Pay for it
Buying an established business is a common way for first-time entrepreneurs to get into business ownership. It’s a strategy that has lower risk because buyers can review past performance and, consequently, be better able to forecast performance. When executed correctly, this strategy can help the buyer acquire a company with solid potential. However, buying a […]
How Much Money do You Need to Buy a Business?
This question is common for entrepreneurs looking to buy their first business. The answer depends on how you plan to pay for the acquisition. In most cases, buyers use financing – since few people can afford to pay for a business in cash only. We think that buyers actually have a different question in mind. […]
Advantages & Disadvantages of a Leveraged Buyout (Small Business)
Leveraged buyouts (LBOs) are a popular way to finance business acquisitions by using debt financing. This article focuses on the pros and cons of using an LBO to buy a small business. We discuss the following: Advantages of using an LBO Disadvantages of this strategy Common misconceptions For a detailed explanation of LBOs, read “What […]
What is a Leveraged Buyout (LBO)? How Does it Work?
A leveraged buyout, commonly referred to as an LBO, is a type of financial transaction used to acquire a company. Leveraged buyouts finance the acquisition using debt and a small equity component from the buyer. In this article, we discuss: What is a leveraged buyout? Advantages and disadvantages of an LBO The equity injection Acquisition […]
Requirements for a Business Acquisition Loan
This article discusses the main requirements you must meet to qualify for an SBA 7(a) loan. This type of loan is one of the most common financing tools used by small business owners to finance a business acquisition. A Quick Word on SBA Loans The term “SBA Loan” is a bit of a misnomer because […]
Leveraged Buyout Financing for Small Businesses
Most people consider leveraged buyouts to be an option that can be used only to acquire larger businesses. However, nothing about a leveraged buyout (LBO) is specific to larger businesses. The concept can be used to acquire smaller businesses, and often is. In this article, we discuss: What is a leveraged buyout? How much will […]
Equity Injection Sources for a Business Acquisition Loan (Down Payment)
Most business acquisition lenders require that buyers of a business provide a down payment, often referred to as an equity injection. The equity injection requirements range from 5% to 30% of the total transaction value. The percentage varies by transaction based on the details of the opportunity. In this article, we discuss: Why do you […]