Let’s start from the beginning: As with the purchase of a property, to buy a company or activity, it is necessary to develop a financing plan to understand how to finance the acquisition.
For this calculation, the cost of an intermediary (such as a lawyer) should not be forgotten, as well as the cost of registering the transfer or any other taxes. Also, if the business needs a restructuring plan, factor its cost into your financing plan from the start.
Most acquisition financing is done through seed financing and debt. However, there are some solutions to avoid investing in yourself:
- Set up seller credit
- Apply for public funding
- Apply for an Honor Loan
- fundraising
- find investors
- lease or lease
- borrow from the bank
Few of these solutions work alone to detect all activity. For example, banks typically do not lend more than 70% of the purchase price. However, they can be combined with each other!
1. Seller Credit
Sometimes it is possible to negotiate the seller’s credit with the assignor, or pay part of the price of the property in installments (up to 50%).
In fact, it is the transferor who gives you the loan to buy the company!
The term of the loan is usually set between 1 and 3 years. This solution has many advantages from the point of view of the seller (interest, negotiation of price increases, etc.) and the buyer (easiness of payment).
2. Lump Sum Payments of Unemployment Benefits
- If you are currently unemployed, you can apply for 45% unemployment benefits to build your capital as part of creating or acquiring a business.
- Payment is made in two steps:
- 50% when you land the deal
50% 6 months after actual creation or acquisition
A fun mechanism to create your creations!
3. Public financing
Various grants are available to acquire assets.
For example, at the national level, the BPI France Transmission Development Contract may finance majority purchases or participations or goodwill , as well as acquisition costs, current account redemptions and enhanced reinvestments.
For information on local assistance, contact the Chamber of Commerce and Industry in your area and they will provide information on the various types of recovery assistance available.
4. Honor Loans
Honor Loans are interest-free loans made to one or more founders by various organizations that support the creation or acquisition of businesses. We will make a special mention of the Network of French Initiatives, where the Network of Entrepreneurs is located.
5. Crowdfunding: Crowdfunding/Crowdfunding
There are several platforms that can be borrowed from individuals:
Crowdfunding – This is a method of financing your working capital needs , or selling a product yourself before you make it. Crowdfunding allows you to finance your first production by reducing the risk because you are sure that you already have a buyer! This is a fun way to make an acquisition to relaunch a range of products, brands, or save impact projects!
Crowdfunding: It is a form of personal financing, both the classic form of payment of interest and return of capital, as well as hybrid (possibility of acquiring shares), or entirely by investment (transfer of part of own funds).
6. Find investors
You can seek financing from individual investors (business angels) or institutional investors (funds, private equity, etc.). To do this, you must show that you can generate exponential growth as a result of your recovery!
7. Bank loans
Bank loans are usually granted for a term of 5 to 7 years and do not exceed 70% of the purchase price.
This requires that the business be at least 3 years old and generate enough liquidity to repay the loan.
Bank financing usually arranges the acquisition in the form of a leveraged buyout.
In conclusion
There are several ways to finance an acquisition without personal contribution, do not hesitate to ask in advance to clearly identify your acquisition capabilities!
Also, keep in mind that none of these solutions alone can finance a shoot without individual contributions, but rather by mixing them.
Do you hesitate to take action? Know that we support buyers seeking financing for all the businesses we sell!
