Financing forms for company takeover

If you take over a company, additional financing is often required. Which forms of financing can you use to finance a takeover?

  1. Loan from the seller

In practice, it often happens that the transferor (seller) provides partial financing to  the successor (koper). Houdt er rekening mee dat dit deel vaak niet groter kan zijn dan dat je zelf in contanten inbrengt. Gespreide betaling is in dit kader ook een voorkomende optie. Hierbij spreek je dan een bepaald overnamebedrag af dat gespreid wordt afbetaald. Zorg wel dat je de afspraken en een betalingsschema goed in een geldleningovereenkomst vastlegt. Je kunt de gespreide betaling ook regelen via de bank. Banken gebruiken ook wel de term vendor loan om deze leningvorm aan te duiden. Je kunt financiering van de overname ook laten verlopen via aandelen, die je gefaseerd overkoopt. Je kunt ook kiezen voor een earn-out-regeling. Bij een earn-out-regeling is de uitkering afhankelijk van het behalen van een bepaald resultaat door de opvolgende partij. Deze vorm van financiering kent grote risico’s op latere conflicten. De Koper heeft immers het stuur van de onderneming in handen en kan dus de resultaten beïnvloeden. Als er geen winst wordt gemaakt hoeft er bv. Niet betaald te worden. Voordeel voor de verkoper kan daarentegen zijn dat als er meer winst is, er ook meer wordt afbetaald. Om een earn-outregeling goed te laten werken is er een onafhankelijke controle nodig op verkoop, inkomen en rendement. Daarvoor wordt meestal een onafhankelijk adviseur ingeschakeld door de verkoper.

  1. Bank loan

For many entrepreneurs, a loan from the bank can offer a solution in a business takeover. A big advantage of this form of financing is that you do not hand over any shares or control. A credit or loan from the bank is also by far the cheapest form of external financing. Especially if you can offer a lot of security and can also finance a large part of the acquisition yourself. The more security there is for the bank, the lower the risk, so the lower the interest on the loan.

  1. (In) formal investors

Another source of money that you can tap into with a takeover is the piggy bank of family, friends and other acquaintances (family, friends and fools). These types of loans are common in business acquisitions. If it concerns a takeover within the own family, this will be the most important form of financing, often in combination with the company’s principal banker. See point 1 above for which loan types you can choose. The great risk of private loans between family and friends is the potential damage to the relationship between those involved. Therefore, record everything well, so that no misunderstandings can arise. You can also call on formal investors. Unlike lenders, they do not provide debt, but mainly equity and subordinated loans. Investors often become shareholders, that is why many buyers only go into business with investors when there is really no other option. Investors also offer more than just money. They are often (former) entrepreneurs with a large network and knowledge of the market. The main investors in SMEs are private equity firms and informal investors.

  1. Crowdfunding

Crowdfunding  has also become a way to finance a takeover. You use an online campaign to appeal to a large group of people (fans) to invest money in your acquisition. There are already a number of success stories of acquisitions that could be financed (partly) thanks to crowdfunding. The big handicap here is the secrecy. Before a takeover is final, a Seller will not allow you to not only disclose all of the company’s details, but also ensure that the company is up for sale. If the financing is not successful and the sale is canceled as a result, the seller has suffered major damage.

  1. Microfinance

Microfinance is now also suitable for company takeovers. The interest rate is, at 8 to 10 percent, in most cases higher than at the bank.

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