Peter C. King, CEO

PE/VC investing differs from other investments in key ways. Investors actively engage in the investment process, holding assets for a limited period (10-13 years), typically aiming for substantial growth within 3-7 years. Investments are usually in privately-held companies, with a focus on superior management teams. PE/VC investors seek early control and negotiate special rights, making their approach distinct from public equity securities trading.

Financing is crucial for purchasing or expanding a business. Options include debt financing, where loans are repaid with interest, like short-term commercial bank loans for inventory or equipment. Equity financing involves investments from owners or investors, often requiring personal funds. Internal financing can come from customers or suppliers. Additionally, SBA loan programs such as the flexible 7(a) loan, Micro-Loan, Community Express, and 504 Loan cater to various business needs.

Seller financing is a valuable tool for facilitating business sales, especially when traditional lender financing is challenging. It offers benefits such as reduced closing costs, flexible terms, and the potential for sellers to receive higher returns. Promissory notes created during seller financing serve as sellable assets, providing sellers with immediate cash instead of waiting for monthly payments. Additionally, past clients who utilized seller financing may become new buyers, leading to more transactions and commissions.

Private equity investors purchase shares in private companies to foster growth and facilitate eventual sales. They utilize methods such as venture capital for early-stage businesses, buyout financing to improve existing companies, and capital for expansion. Contrary to common fears, partnering with private equity often allows owners to retain significant control and benefit from company growth. Expertise is crucial in selecting partners who understand the business and market, aligning with the owner's goals for a successful collaboration.

Deciding to buy a business involves overcoming the challenge of securing the capital needed for the acquisition. Fortunately, numerous financing sources can assist in this process, with options ranging from simple to more complex. Navigating these choices can be taxing, but by focusing on the six primary sources of financing, you can simplify your search and find the right solution to help you successfully complete your business purchase.