While the current pandemic has brought its fair share of challenges to businesses, like any other dramatic shift in circumstances, it has also presented opportunities for those who know where to look.
We are seeing many savvy business owners actively seeking out acquisition opportunities in a bid to increase revenue, find new routes to market, and gain economies of scale. This has become an attractive option for entrepreneurs who are ready and willing to snap up their ideal target businesses. The current economic climate has created a buyer’s market, in which there are bargains to be had for those with access to finance.
If you’re ready to take the plunge to buy a business and need to raise money to fund the purchase, we’ve outlined some key factors which will drastically increase your chances of successfully raising finance to buy a business
The Business to be acquired is based in the Midlands region
While there are businesses for sale nationwide, we are seeing some particularly good opportunities in the Midlands region.
Its purchase price less than £250,000
Finance amounts of under £250k are much more straightforward to raise from lenders in the current market. This means faster turnaround on the deal and a much greater likelihood of success.
The buyer is experienced within the industry sector they are buying in to
Having experience in the industry your are buying into goes a long way towards giving lenders confidence you know what you’re getting yourself into, will make a success of the business, and as a result, repay the finance out of the businesses profits.
Cash stake of 10% or more of the purchase price can be put forward as a deposit
Just like when getting a mortgage on a property, the bigger your deposit, the happier the lender will likely be to finance the deal. A larger deposit means a more equal share of the risk between both parties (as opposed to the lender taking all the risk).
Financial records showing the business was viable before the pandemic
Being able to evidence the business you are planning to buy was fundamentally solid prior to the coronavirus pandemic will be important if you want a lender to fund the deal. They will want to know that under normal circumstances, the business would be viable and profitable.
Evidence the business could cope with a second lockdown, should one ever happen
Given the current situation, lenders will want to see you have planned for worst case scenario and that the business would not fold should the country be plunged into a second lockdown. While this is hypothetical and may well never happen, it will provide an additional layer of confidence to the lender that they will get their money back should the worst happen.
For prospective buyers who require finance and who tick off most or all of these factors, there are some fantastic opportunities to be had in the market right now.
At BizBritain we have proven experience in business acquisition finance
with strong links to lenders, particularly in the Midlands region who have a strong appetite to support business purchases. We focus heavily on a relationship-based approach and take time to thoroughly understand your long-term needs and goals. As a result, we achieve a very high success rate on completing acquisition deals.
If you are ready to buy a business and you tick off most of the 6 points above, enquire now about how we can help you raise the finance needed to complete your acquisition.