Intelligently Structured Financing for Your Business Acquisition
CEOs in the middle market are showing strong interest in growth through acquisitions. Find out how US Capital Partners Inc. can provide your company with the custom acquisition financing it needs to grow.
The first six months of 2017 proved to be the strongest first half for middle market M&A in 10 years. Underlying conditions have become favorable to M&A, such as an aging population of baby-boomer owners looking to sell their companies and the proliferation of technology in all industries. Activity was also fuelled by confidence in the overall economy, including a widely held expectation of lower taxes and fewer regulations in the future, as well as by investor enthusiasm for private equity as an asset class, which is fueling fundraising.
The momentum in the middle market looks likely to continue, with deal-making in the technology, media and telecommunications sector expected to soar over the next 12 months. Other sectors expected to experience high growth are energy, consumer goods and retail, and manufacturing.
Financing Your Business Acquisition
Making an acquisition can be a complex undertaking, especially for a small or medium-sized business (SMB), and often requires multiple sources of financing. Generally, there are three basic ways, other than cash, to finance your acquisition and grow your business to the next level:
1. Loans against specific business assets
An acquisition often involves the purchase of new business assets, such as buildings or equipment. Since 1998, US Capital Partners has been providing asset-backed loans of $500,000 to $100 million to finance acquisitions and other growth initiatives. Assets that qualify for such loans include accounts receivable, inventory, purchase orders, real estate, machinery and equipment, and even intellectual property.
2. Loans against cash-flow and enterprise value
US Capital Partners offers growth-capital term loans of up to $100 million. Businesses with a competitive advantage in a fast-growing industry can consider subordinate financing, which may lead to higher loan amounts. Unlike conventional bank loans, this formula allows flexible repayment terms.
3. Equity financing
US Capital Partners, through its registered affiliate US Capital Global Securities, LLC, also participates in and has wide distribution for private placements of equity to meet a variety of growth objectives, including funding add-on acquisitions. In raising private equity capital, US Capital Global Securities always make sure the deal structure is appropriate for a client’s specific needs. The firm is able not only to facilitate sell-side and buy-side transactions, but is also licensed to actually provide financing for M&A.
Customizing Your Acquisition Financing
Often, the best financing solution for a company is an intelligently structured mix of cash (if available) and debt, with some equity. US Capital Partners can, for instance, structure and provide an optimal combination of a growth-capital term loan together with some equity financing. This offers a minimally dilutive option to a straight equity raise, allowing you to retain greater ownership of your business.
If you are currently engaged with or aware of a business that is seeking acquisition financing, please email Jeffrey Sweeney, Chairman and CEO, at jsweeney@uscapitalpartners.net or call (415) 889-1010.