Financing a business acquisition

  • by Krystena Petrakas 

Interview with...

Stan Prokop, president, 7 Park Avenue Financial
Topics covered:
Barriers to borrowing, buyer mistakes, Canadian lending environment
CV:
Former credit manager at Hewlett Packard, 30 years' experience in business financing. Also worked at Cable and Wireless, Digital Equipment Corporation and Ashland Oil
Expertise:
Asset-based lending, working capital financing, franchise finance, SR&ED tax credit financing, film tax credit financing, equipment financing, securitization facilities , government small-business loans
Location:


Oakville, Ontario
Buying a business

Stan Prokop on the services his company offers to entrepreneurs...

“We focus in six or seven core competencies in the film and manufacturing industries. So we would typically meet with the client and determine what their needs are for any of those types of financing and then proceed to execute on the customer’s request.

A unique part of our business is that we deal with one person start ups as well as some major Canadian corporations

“A unique part of our business is that we deal with one person start ups as well as some major Canadian corporations that have revenues in excess of $300 million I think would be one of our larger clients.”

On the difficulties in buying a business in Canada right now...

“I would say it’s access to capital whether a company is either challenged or in some form of distress, or in some cases simply not able to access the capital for the strong growth.

“We have a very conservative lending environment here in Canada and so when you’re falling outside the box it is difficult to attract the sort of financing you need and many owners simply don’t understand their options.”

On the common mistakes that buyers make and resources that may help entrepreneurs...

“I would say either over paying on a business or certain assets, in many cases the valuations may be a little out of line and a lot of business owners fail on due diligence. The later regret an acquisition because they didn’t do the right amount of due diligence.

“There’s one great programme in Canadian called the EIL programme, it’s government sponsored but it’s run by the Canadian banks on behalf of the government. You can purchase any small business up to $350,000 at very attractive rates, terms and structures.”