Summary: New entrepreneurs are often torn between buying an existing business versus launching a new company from scratch. Buying an existing business typically has a lower risk than starting a new company. However, this outcome depends on buying the right company and operating it successfully. The article discusses the advantages and disadvantages of buying a […]
articles
How to Finance a Laundromat Purchase
Buying a coin-operated laundry is a popular option for first-time investors. Many laundromat acquisitions require lender financing to cover a large part of the cost. In this article, we discuss how to finance a laundromat acquisition. We cover: 1. How are laundromat acquisitions financed? The majority of laundromat acquisitions qualify as small businesses. Most acquisitions […]
Buying a Business? How to Pay for it
Summary: 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 […]
What is an Equity Injection?
Summary: The equity injection is an investment of capital that a buyer contributes to a business acquisition. It is integral to most acquisitions because every lender requires one. The size of the equity injection varies and depends on the transaction’s size, the target company’s profile, and the lender’s risk tolerance. The typical range is 5% […]
Can a FedEx Route Carve-Out Acquisition be Financed?
Summary: FedEx Pick and Delivery (FedEx P&D) route carve-out sales are often listed through business brokers. While popular, these acquisitions are notoriously difficult to execute. Furthermore, they are difficult to finance and often require buyers willing to pay “all cash” for the business. In this article, we explore: 1. What is a FedEx route carve-out? […]
How Much Money do You Need to Buy a Business?
Summary: Buyers, sponsors, and managers often want to know how much money they will need to acquire a company. They may be trying to gauge the size of the company their funds can acquire or the scale of the equity injection. Ultimately, it’s the same question. The answer to this question depends on many factors. […]
Advantages & Disadvantages of a Leveraged Buyout
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: For a detailed explanation of LBOs, read “What is a leveraged buyout?“ 1. Leveraged buyout advantages When used correctly, […]
Can I Get a Business Acquisition Loan with No Collateral?
Summary: There are many misconceptions regarding business acquisition loans and their need for collateral. This article explains the collateral requirements in clear terms and puts you in a better position to negotiate this requirement with lenders. The article covers: 1. The basics: What is collateral? “Collateral” refers to assets pledged to a lender as security […]
Can You Do a Leveraged Buyout with No Money Down?
Summary: Leveraged buyouts are a popular way to finance business acquisitions. Though well-known for their use in large transactions, they are commonly used in smaller acquisitions as well. Thanks to some popular media stories, leveraged buyouts (LBOs) have gained a reputation for financing an acquisition without using your own money. But is this portrayal accurate? […]
Pros and Cons of Buying a FedEx Route
FedEx routes provide small business owners with the potential of a great business opportunity. However, no business opportunity is perfect, and you must carefully weigh the benefits against potential downsides. This article discusses the advantages and disadvantages of acquiring a route and becoming a contractor for FedEx. Is a FedEx route a good investment? Buying […]