Business acquisition - raising finance

[ThomasC89]

Good evening,

This is my first post - go easy on me!

I am currently in full time employment with a strong ambition to own my own business. I am considering my options to make this a reality and one path I am considering is acquiring an existing business with a future business partner.

We have approximately £100k that we are willing to invest but the businesses we are interested in have a higher valuation (£350K - £500K). I am looking for advice with following

1. What options are available for raising the additional finance?
2. Will lenders borrow against a potential business? (Have read that business loans for growth are possible against an existing business)

I may decide to continue full time employment and operate as silent investor whilst my business partner grows the business. Does this pose any problems to financing.

Thanks in advance
Thomas

 

[Mark T Jones]

Here is what lenders need to know:

• What will the money be used for?
• What is the ability to repay?
• How will we get our money back when it all goes t!ts up?

The first is pretty much answered

The second will be a combination of trading history and credentials of incoming owners

The third will be mixture of assets behind the deals and guarantees / charges over property.

 

[pentel]

Would vendor financing be an option? With this you pay the vendor a down payment and then pay the balance over a period of time from the profits of the company you are buying.

 

[WaveJumper]

All of the above but what makes you think the business is worth the asking price you mention figure from 350k to 500k. Have you taken professional advice on this.

And personally know one looks after your money / investment like you are you sure your partner really is going to have your best interest at heart, this forum is littered with situations where partners have fallen out. If you do go down that route get proper legal advice regarding your shareholders agreement etc.

Best of luck

 

[Clinton]

No, no, no, no, you don't want to invest £100K in a business!

You want to invest £10K in a course on how to buy a business with no money down. They'll show you how you can buy a business using just an empty coke bottle and six inches of jaffa tape.

Then you can buy a business for £0 and spend the other £90K!

Go the The Dealmakers Academy, or the Harbour Club, or numerous similar courses and by this time next year you'll be a millionaire.

Learn more about these fantastic courses by searching LinkedIn for #onepoundcharlies

 

[Mark T Jones]

coke bottle and six inches of jaffa tape.

Edible packaging - you may be on to something....

 

[Paul Kelly ICHYB]

No, no, no, no, you don't want to invest £100K in a business!

This guy is new - he might take your advise seriously!

 

[DontAsk]

The third will be mixture of assets behind the deals and guarantees / charges over property.

Which could include personal guarantees.

 

[Mark T Jones]

Which could include personal guarantees.

Definitely will, I'd suggest.

 

[The Byre]

Good evening,

one path I am considering is acquiring an existing business with a future business partner.

Hardly a day goes past on this forum without someone asking for help because a partnership has gone t!ts-up.

My most successful business was a German news agency. It began in the 80s with nothing but my trusty typewriter and a telephone. After about six months, this became a fax machine and a computer - total cost about DM5,000. Then it became a better computer and two more telephone lines. Then it was two assistants and several freelance journalists. I was able to sell the whole thing when we had well over 150 freelancers and I could retire at the age of 50.

I get the impression that most business purchases end badly. Well, perhaps many if not most. Good businesses grow organically because there is a demand and most businesses get sold because the owners think that further growth with them is not possible for some reason - either they are getting old or the business is failing or they see storm clouds or some future development destroying that business.

Either that or some Charlie has won the Lottery or inherited too much money or is prepared to mortgage his children's future and hand over a six- or seven-figure sum for a total turkey.

The time to go into debt is when you KNOW that your business is succeeding already. You should NEVER go into debt to find out IF it could possibly succeed.

 

[UKSBD]

The time to go into debt is when you KNOW that your business is succeeding already. You should NEVER go into debt to find out IF it could possibly succeed.

Sir Malcolm Walker (Iceland stores) was on desert island discs last week - https://www.bbc.co.uk/programmes/m001gwtx

Well worth a listen.

Edit to add: start at about 22:00 to here how they were in cash profit within a week

 

[Clinton]

This guy is new - he might take your advise seriously!

Maybe he should start stocking up on gaffa tape and empty coke bottles.

 

[japancool]

I will start a business selling empty coke bottles and gaffer tape. How much is it worth?

 

[WaveJumper]

I will start a business selling empty coke bottles and gaffer tape. How much is it worth?

At least if they are empty your business won't go pop ???

 

[DoolallyTap]

I wonder what the businesses you are looking at actually are. Do they manufacture or buy and sell?Presumably, you have significant experience in their market. You can borrow the balance required if you have plenty of security. If you put in your £100 and expect your new shareholder to put in £250, he would probably become the majority shareholder You need to quit your job and commit full time to the venture.
Why not start up in competition instead of buying the existing businesses.