Debt financing remains available for business purchases, it’s just more cautious than it was a couple years ago. Much more cautious. My firm has closed a few deals in this climate but banks have been burned and they must operate conservatively to ensure they have enough capital to withstand any bad debt losses they may suffer in the coming months and years. Bankers are also less willing to overlook risk factors in deals such as customer concentration, product concentration and earnings volatility. Nobody knows how soon the economy will improve, or to what degree, but the safest thing is to be conservative.
The deals that are getting done today are reasonably priced (i.e. the price being paid for the business); have tangible assets that fully collateralize the debt; and plenty of equity in the capital structure.
All rights reserved. Copyright DL Perkins, LLC. © 2010.
Acquisition Advisors is a business unit of DL Perkins, LLC. To learn more about Acquisition Advisors, go to www.AcquisitionAdvisors.com.
This content is intended to provide general information on the subject matters covered. It is distributed with the understanding that neither the publisher nor any distributor or advertiser is engaged in providing legal, tax, insurance, investment or other professional advice. The advice of a qualified professional should be sought before any reader applies a concept presented herein to his or her particular situation or business.
Facebook
RSS
Twitter
Blog
You Tube
