by OptimizeBlog | Jun 8, 2016 | Business Financing, Corporate Finance, Mergers & Acquisitions
By combining your computer systems and merging some departments, your new giant company will be better than ever. Sounds great, right? Sadly, it’s not that simple. There is an overwhelming amount of thought, planning, and negotiation that goes into merging two (or more) companies, and to ensure that your merger goes off without a hitch, you should aim to establish a committee to oversee the process. Here are three things to keep in mind when selecting the members of your committee 1. Find the Right Committee Members The first step that should be taken is to establish your committee that will be responsible for the negotiations of the merger. It’s important to choose members that are independent of the corporate entities involved, and who are seasoned and experienced negotiators. 2. Identify and Avoid Conflicts of Interests You should be aware or aim to identify any potential conflict of interest when negotiating your merger, and ensure that those involved in the process are completely independent. The ultimate goal is to ensure that the transaction is protected from bias, and that the merger and those involved are working in the best interest of the entity (or shareholders) rather than themselves. 3. Keep your Committee Focused and Vigilant It’s imperative that your committee stay vigilant and focused during the negotiation process. In some cases, the transaction isn’t done until well after the deal has already closed. The process of a merger can be long and exhausting, but it’s imperative that your committee stay focused until the process is fully...
by OptimizeBlog | Jun 1, 2016 | Corporate Finance, Debt Financing
Whether that be a term loan, line of credit, or some other bank credit facility, a business usually has some sort of debt on the books. For big business especially, it’s important to know how to best manage your debt so it doesn’t hinder your growth or sink your business altogether. Here are three suggestions to better manage your debt as you grow your business. 1. Negotiate better terms If protecting your cash flow is a key goal of yours, then making your minimum payment as low as possible gives your company flexibility to protect its cash flow. See if you can have your interest and principle accrue, or if you can have interest only payments due. You can always turn an interest only payment into an amortizing one by paying down additional principal. 2.Negotiate better amortization schedules The longer it takes to pay off your loan, the lower your payments are going to be. If the loan amortizes over ten years, your payments are going to be lower than if it pays off over five. You may have to pay extra principle, but the key is to minimize your required payments to guard your cash flow. 3. Negotiate better interest rates This may take a little tact and salesmanship, but the best tool to help you negotiate interest rates with your lenders is to get them competing for your business. This shift takes you out of the position of “applicant” and transforms your lenders into people trying to earn your...
by OptimizeBlog | May 26, 2016 | Business Financing, Corporate Finance, Debt Financing, Mergers & Acquisitions
After seeing some success in your business, it’s natural to lean towards expanding your operations to a completely new and difference audience. However – much like forging your idea into a successful business – establishing yourself in a bigger market is much easier said than done. Customs, international business protocols, and consumers needs/wants are just a few factors that can cause challenges to your business. Here are three tips to keep in mind when thinking of expanding your business internationally. Keep in mind the cultural differences Regardless of how you pitched your business domestically, when entering a new market or location, your pitch needs to be adjusted to meet local standards. That could mean either adjusting the content, format of your pitch, and maybe even your product. In some cases, a major overhaul might even be required to successfully pitch your business abroad. What’s important is that you look at the market you’re attempting to enter and research the potential changes that need to be made earlier on. Plan to spend Establishing your business in a new market is extremely expensive and requires a lot of funding, and the closer you get to launching your product/service, the more you’re going to need to spend. Whether you have enough money reserved or you need to raise additional funds, you need have a good idea of what to expect when it comes to how much you’re going to be spending in order to establish yourself in this new market. Embrace your track record Just because you’re moving to another market doesn’t mean that you should forget about the...
by OptimizeBlog | May 18, 2016 | Business Financing, Corporate Finance, Debt Financing
When a company has immediate or short-term financial needs, it can finance these needs by issuing debt. Debt financing, in layman’s terms, is borrowing money from investors or lenders and promising to pay them back the full amount, plus interest, in a predetermined length of time. Firms commonly issue debt by way of the sale of bonds, bills, or notes to individuals and/or institutional investors. Here are five advantages to using debt as a method of financing your business needs: No future lender’s claims: Once you’ve re-paid a lender in full, they have no direct claim on your future earnings. Even if what this loan paid for resulted in your business’ revenue/profits/assets to double, the lender is still only entitled to the face value of the loan plus interest. You maintain complete ownership of your company: Other methods of financing may require you to dilute your share of your business in exchange for financing, whereas debt simply renders you obligated to pay back a loan to the investor that lent it to you. Once that investor has been re-paid the agreed-upon amount in the agreed-upon time, your obligation to them is over and your business engagement is completed. Fulfilling short-term needs: Debt financing can easily be secured in a short amount of time on a short-term basis. This makes it quick and easy for smaller businesses to finance short-term business needs. Tax deductions: In most cases, the principal amount and the interest payments on a business loan can be classified as a business expense, and thus can be deducted from your business income taxes. This...
by OptimizeBlog | May 5, 2016 | Business Financing, Mergers & Acquisitions
We often hear about successful transactions, but many potential deals can fall through either during the process of negotiation or after due diligence has been completed. Even the successful M&A transactions can have its difficult moments. With that, here are five M&A deal breakers in transactions to be cognizant of. 1. Valuations & Price A strategic buyer may value a business higher than the seller might expect – or vice versa. In any case, the valuation expectations between a seller and buyer can differ and this can be a major source for a deal breaker. Managing the expectations of business valuations is a crucial task for M&A advisors. 2. Buyer Financing Some buyers can have more difficulty in getting funding arranged and this might ultimately end up as a deal breaker. Deals may have been leveraged up to 80% of the sales price in the past, but current financial institutions are more careful and typically ask for 50% equity contribution. 3. Legal Items Legal items can be a deal breaker as well. If the legal structure of the seller is not well set-up or too complicated this might result in a deal to hit a dead end. Although there are possible workarounds, the easiest one being an asset sale, it can mean the death of a once possible transaction. 4. Lack of Preparation by the Vendor A seller has the best chances for a successful business sale if he is well prepared and put in a lot of effort. It is great to show commitment as buyers usually have little time and only want to deal with serious...
by OptimizeBlog | Apr 11, 2016 | Business Financing, Corporate Finance, Debt Financing
Though it may be easy to find a bank that provides business loans, it is best to make sure you find an institution that fits who you are, what you are doing and where you are going. If you are looking to borrow money to finance your business growth, here are five smart questions to ask potential lenders. 1. Are you really prepared to meet my lending needs? If I needed money today, would you be able to provide it? This is an important question for every business owner to ask a potential lender. You need to make sure your bank has the resources to finance not just your business, but many others. 2. Do you understand my reason for borrowing? Some institutions will not lend to casinos, others do not fund restaurant ventures or acquisition loans. You want to make sure your bank knows what industry you are in and why you need more capital. It is a mistake to not be honest and precise when talking to your lender about a possible loan. 3. What are the risks to loan repayment? There are many financial risks, and there are many variables. Your lender should help you pinpoint the risks you face as well as assess where your business stands. How much debt does your business have today? Iis your industry to the business cycle? Are changes in technology something that could disrupt your ability to grow? 4. Can these risks be mitigated without adding tough terms to your loan agreement? Once you have identified and assessed the risks, you can work with your lender...
by OptimizeBlog | Mar 31, 2016 | Business Financing, Corporate Finance, Debt Financing
Line of credit, a term loan, or some other bank credit provision. If you have any one of these tied to your bank account (or plan to in the near future), take solace in these five tips to better manage your corporate debt as you scale your business. 1. Negotiate better interest rates with your lenders Move away from the idea of being just “the applicant” and get the lenders competing for your business. Let the lender know you are surveying the market to find a financing plan that specifically fits you. The conversation might sound something like “Tom, we are in the midst of interviewing a number of banks to see who we want to work with. May we ask a few questions to see if your institution is a good fit for us?” 2. Negotiate an amortization schedule that fits you The longer you pay off the loan, the lower the payment will be. A loan amortized over five years will require a lower payment than a loan amortized over two. A loan amortized over ten years will require a lower payment than a loan… Well, you get the point. The goal is to minimize your required payment to protect your cash-flow in the event there is a short term dip in your business. But be on the watch for hidden fees (see below). 3. Discuss eliminating hidden fees Be mindful of the small print and negotiate strongly to eliminate (or at least minimize) hidden bank fees. Looks for things like “origination fees,” “payment processing fees,” “automatic rate increases,” and “prepayment penalties.” 4....
by OptimizeBlog | Mar 3, 2016 | Corporate Finance, Mergers & Acquisitions
Much like a marriage, merging companies can include the best and worst of times. It’s on us to decide whether or not our potential partner is a good fit. Take a look at these three points before you say “I do.” 1. Get the Facts Straight Do your due-diligence. Never go into the merger without a clear understanding of the terms in play. What are they? How will they be executed after the deal is signed? These questions need to be answered. Try to visualize life after the deal, even the day-to-day. These issues can and have been notoriously overlooked, which have cost companies millions. 2. Look for a Mesh in Company Culture You really have to know your potential partner – after all, this is corporate marriage we’re talking about. It’s important to examine cultural issues as closely as the numbers. Although it’s not on the balance sheet, it’s just as important. We keep going back to marriage, but the analogy rings true – if you partner up with someone with differing views, you are poised for disaster. While it’s not always easy, you must integrate culture as best you can to sustain a long-lasting relationship. 3. Plan for Worst Case Scenario First, be aware that things can go wrong – or at least not as good as you hoped. If you own a business, you will need to accept and live with this fact. Just like it’s smart to have a prenuptial agreement in a marriage, it’s also smart to have an exit strategy for your company. Nobody wants to think about divorce, but it’s...
by OptimizeBlog | Feb 5, 2016 | Corporate Finance, Mergers & Acquisitions
Clear Objectives It is essential to have a step by step action plan. This helps keep the process on the right path and ensures that everyone involved knows their role in the process. It is important to define your goal and come up with a strategy on how to get there. Don’t Jump At the First Offer Ideally, you want multiple offers so that you are given a choice. Having only one offer leaves you with nothing to compare it with. Comparing different offers help you get the deal that truly works better for you and your company. Don’t Wait For a Slightly Better Offer If the offer is sufficient and you are ready to do a deal, take it! Sometimes the perfect deal never comes, and waiting around for it won’t help. Communication Is Key Keeping everyone involved makes the process run smoother and more efficiently. If everyone feels involved and part of the process, there will be a greater success rate. Mergers and acquisitions make people nervous, so making sure that everyone is in the loop at all times is imperative. Share...
by OptimizeBlog | Nov 20, 2015 | Business Financing, Corporate Finance, Debt Financing, Mergers & Acquisitions
You’ve finally found that investor interested in helping your company raise growth capital. Now you need to get the exact deals and terms that you’re looking for. Strong negotiation skills are needed in every business venture and it is important to be able to compromise on the terms so that both parties are happy with the deal. Negotiation skills are acquired through time and practice. Here are five tips that will help you get started: 1. Give and Take: Make sure you know how to compromise. Both sides need to have certain needs met. 2. Be Willing to Walk Away: Go with your gut. Sometimes the deal will not go through – and that’s okay. If it’s meant to be, it’ll happen, and sometimes you may need to go through multiple deals in order to get what you need and want. 3. Don’t Rush: Don’t ever rush when trying to complete a business deal. By rushing you may miss important details in contracts, or you may miss out on a better deal. That being said, sometimes waiting too long isn’t helpful either. Make sure to find the right balance. 4. Do Your Homework: Do all the research you possibly can on the investor(s) that are interested in your opportunity. Going into a business venture completely blind is never a good idea. Doing the proper research will eliminated future problems. 5. Listen: Make sure to listen to the other party. This is especially important in making sure that the deal you come to terms with is fair for both sides. Share...
by OptimizeBlog | Oct 23, 2015 | Business Financing, Corporate Finance
Although there has been much debate on this topic, there is certainly a good argument to be made that suggests women, innovators and start-ups are being avoided, or at least treated unfairly, by Canadian suppliers of capital (i.e. banks, trust companies, etc…). Referring to the 2007 Survey on Financing Small and Medium Enterprises done by Statistics Canada, this financing gap argument is easily seen in the following segments: Businesses owned by women: Only 62% of businesses owned solely by women have their loan requests authorized. Compare this with businesses owned solely by men, which received authorizations on as many as 88% of their loan requests. Smaller Businesses: Businesses with between 1 and 4 employees had only 86% of their loan requests authorized, while businesses with 100 to 499 had as many as 97% of their loan requests authorized. Innovative Businesses: Businesses with R&D expenditures greater than 20% had only 79% of their loan requests authorized. Non-innovative businesses with no R&D expenditures had as many as 87% of their loan requests authorized. In this day and age, and especially in an economy that is in such need of a kick-start, it is staggering to think that we are still putting hurdles around the segments of the market that could very well lead us into our next growth phase. Entrepreneurs have enough of an upward battle as it is, let alone unfair treatment such as this. We’d love to hear from such entrepreneurs who have experienced these obstacles, to see if we can do something about it! Share...
by OptimizeBlog | Oct 2, 2015 | Business Financing, Corporate Finance, Debt Financing
In order to expand your business, it is important to understand the two main financing methods. Equity requires investors while debt, which is familiar to most people, is a temporary loan that needs to be paid back with interest. Equity financing involves bringing in investors who provide capital in exchange for a share of the business. This is the strategy that companies use on the popular TV shows, Dragon’s Den and Shark Tank. Unlike debt financing, you are not required to pay back the loan, even if the company does not make profits. Investors don’t require an immediate return on investment since investors are looking at the big picture of the company. Getting written a check may seem like the perfect solution, but this comes with major strings attached since you no longer retain the exclusive rights to the company. Therefore, you need to split the profits with the venture capitalists. Debt financing involves borrowing money from a financial institution or bank and usually requires good credit. Taking on debt scares many business owners because they fear that they will be unable to repay the debt along with the added on interest. With debt financing, full ownership of the company is still in your hands. Taking on debt can also help with future borrowing since it can build up credit if the payments are made in a timely manner. Unlike equity financing, debt must be repaid at some point. Cash flow is required otherwise the payments pile up and therefore make it harder to repay. If the debt-equity ratio is too high it will push away any future investors...
by OptimizeBlog | Sep 25, 2015 | Business Financing, Corporate Finance
The best companies embrace a culture of innovation and creativity, always pushing forward with new ways to serve their clients, customers and employees. Balancing structured, tested approaches with forward thinking insights. Thought leadership can best be defined as industry leadership by way of applying innovative insights to that which has worked in the past. Leverage the old to make space for the new There is no reason to reinvent the wheel. If it’s not broken, don’t fix it. These concepts are true. However, companies who do not evolve ultimately stagnate. Stagnation is death for any business. The best companies understand how to make use of innovation by building on a solid platform from the past. Industry leaders have keen insight into how to leverage the old to make space for the new. People: Your Greatest Asset Great companies know that their brand is created daily by those who work with and for its cause. Your people are the greatest strengths your company has. This applies to both your internal workforce and external customers and clients. People matter. Companies, who are considered thought leaders in their industry, making a real impact on their industry’s landscape, value their people first. Invest in “your people” wisely. Your customers, clients and those employees who promote your brand tirelessly are investments you cannot afford to neglect. Thought leadership achieves results because those companies thinking big are those companies looking forward. Tweet...
by OptimizeBlog | Sep 25, 2015 | Corporate Finance, Debt Financing
Publicity seems to be either an elusive monster or highly coveted trophy for early stage entrepreneurs. Regardless of your personal view on the matter, learning to leverage publicity to your company’s best advantage could prove to be the ultimate time investment. You’ve probably heard about the importance of social media, press releases and other online promotional activities. Early stage start-ups do not often have money for high-level, traditional publicity campaigns. This is where the beauty of an online universe can work to your brand’s greatest advantage. Hire a Professional It seems fitting to quote Bill Gates in a post about start-up ingenuity. It was he who said, “If I had one dollar left, I’d spend it on publicity.” Word of mouth marketing is still your brand’s strongest advocate. This is at the heart of what a publicist does. Everything your brand says and does is PR. The OCMX platform is a totally transparent marketplace with a unique approach to raising Growth Capital. For companies who use our platform, a well-executed publicity campaign is all part of our strategic approach. Find a Reporter The online world of publicity is fast moving. This created a need for ‘reporter to story’ platforms. Reporters frequent website platforms such as ‘Haro’ to connect directly with new story ideas and story candidates. Both free and paid versions of the service exist, simply sign up for instant alerts. Keep an eye out for relevant story requests that would be of benefit to your business. Respond quickly and you could end up securing brand-changing exposure. Blog Tours You have probably heard about blogging to increase your online...
by OptimizeBlog | Aug 28, 2015 | Business Financing, Corporate Finance
People often focus on more formal business skills, such as networking and building their elevator pitch; small talk just doesn’t seem to be a priority for most people. It may seem strange to focus on the art of small talk, but being good at small talk can be vital to your professional success. Regardless of your role in a company, you will most definitely – at some point – find yourself in a professional setting where you are forced to make conversation with someone you don’t know; it could be a senior manager, client, or even a co-worker. But how do you hold a conversation with someone you barely know, or someone you seemingly have nothing in common with? It’s always good to have a couple of go-to topics in your back pocket – that way, you’re never sitting there twiddling your thumbs, having to think of a topic of forced conversation. Here are some tips on making small talk like a pro: Ask open-ended questions The key is to ask questions that are easy enough to answer so that the person won’t have to work too hard to engage in conversation, and also something that can’t be answered with a simple “yes” or “no” – which stops the conversation pretty quickly. Plus, if you’re the one asking questions, you’re letting the other person direct the conversation. This allows the dialogue to develop naturally, and puts less pressure on you having to find a new topic to keep the conversation going. Share something about yourself One of the easiest conversation starters is making a small comment that...
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