We recently invited Scott McGregor, Commercial Broker at Mortar Finance to a webinar on the topic, ‘Funding Your Next Business Acquisition.’
Here’s what he said –
We see a lot of business acquisitions where the vendor was quite happy to provide some finance to the buyer on that business. It is accepted by the banks, but it is probably lower on their appetite scale than having genuine cash or property equity into the transaction. But, as long as the bank can understand the vendor finance agreement, have that provided to them and potentially have their lawyers read through it to understand how it may impact on the bank debt, some vendors will want security over the business. So if the vendor’s got security over the business, the bank will want to know that they can have a preferential security position over that business.