We’ve closed several commitments for lines of credit, term loans and mortgage loans for equipment and real estate. When reviewing your term sheets or commitment letters, after you go through the borrower, loan amount, rate and fees, collateral and guarantor section, you’ll end up at a section called covenants.
I have several clients that are involved in business acquisitions. With a sluggish economy, many are attracted to the opportunity to acquire business versus grow organically. If you’re deciding to buy a company, here are 3 things you must know about financing the acquisition.
I’m a big believer in managing your business using your balance sheet first, then your income statement. However, simplifying that by using KPI’s (key performance indicators) can help you get a quick view of your financial landscape and determine your financial health at a glance. Here’s 5 KPI’s that every business owner should use. These are in no particular order, but they cover profitability, liquidity and leverage.
A very successful business owner and mentor of mine used to say, “The path of least resistance is what makes men and rivers crooked.” In your business, the path of least resistance is using a credit card or some other form of borrowing. Before you know it, the amount of debt has piled up, the interest you pay on the debt is significant, sometimes 18-24 percent, and you begin to question whether borrowing the money was a good idea or not.
You're busy running your business and all of a sudden you get a phone call from a potential suitor that is interested in buying your business. You're flattered, intrigued, you might even consider selling. But what's the value of your business? How do you structure the sale? What's going to be your tax liability? What's the number you walk away with? Are you and the business ready to sell?