Business Start-Up & Acquisition Financing

If you are looking to start a new business or need assistance in financing a new business, you have come to the right place. At CLX we have the expertise and experience to help you draft a business plan and put it into action. And if you need to leverage your existing business to buy-out a partner, or come up with a unique capital structure to fund the purchase of a new business, we have the expertise to manage that as well. Typically we utilize a combination of Borrower liquidity, Borrower assets, and outside capital (either from investors, lending institutions, or both) to structure a transaction to get the start-up or acquisition completed. Sources available are as follows:

a) Traditional Banks – There are many traditional banks willing to fund business start-ups and the acquisition of businesses. In order to get the financing done, the deal has to be structured in such a way as the Bank feels they are in control and are in the first position on the new business, that there is sufficient collateral to cover the transaction, and a guaranteed source of repayment. We work with the Borrower to put these items together and present them to the lender. Often times we have to flex other assets the Borrower might own in order to do so. If it is a leveraged buy-out, sufficient collateral has to be present to protect the Bank while still maintaining revenues and cash-flow. We assist Borrowers in putting their request together including projections and the analysis the lenders need to see in order to get comfortable with the transaction. Advance rates vary greatly depending on the type of new business or the structure of the buy-out. But no matter the structure, the Borrower either has to have equity into the transaction, equity already in the existing business, or has to be willing to pledge additional outside collateral to make the Bank comfortable. Often times to bridge the gap we can utilize SBA 7A or USDA financing to provide the additional support the lender needs to make the transaction happen.

b) Private Lenders – We have a variety of private lenders that will consider funding new business start-ups or acquisitions. However, these lenders tend to be quite conservative, and advance rates are typically much more conservative then you will see at a traditional bank. They will want to know the Borrower is invested in the transaction personally before they fund any portion of the request. Interest rates tend to be in the teens with relatively short terms.

c) Private Investors – We have private investors available that are willing to come in and partner on business start-ups and acquisitions. The amount of investment available will vary greatly depending on the condition of the company, the need, and the perceived return from the investor. Each deal is structured differently, but typically the investors are looking for a preferred payout on the capital they have invested at a reasonable interest rate as well as the income earned for their portion of the investment / ownership in the company. If the investor does take an ownership interest in the company, often times repurchase agreements can be put into place on the front-end to allow the existing owners to buy that investor back out at a later date. There are many ways to structure these transactions, and we can work with your client to get it done. It should be noted this type of capital is hard to find and takes time as often times investors are cautious and will really take their time reviewing each potential transaction before moving forward.