American seeking financing to purchase a small acquisition in Canada

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by a searcher from Millersville University of Pennsylvania
in Mantua Township, NJ, USA

1yr ago

American seeking financing to purchase a small acquisition in Canada

Hey all - I came across a business in Canada that I'd be interested in purchasing. It's relatively small doing about 300k CAD top line, we didn't discuss SDE on our first exploratory call. The seller would be staying on board and joining my company. In EOS terminology she realized she'd prefer to be an Integrator than a Visionary.

I've been able to find some information about purchasing a business if you want to move to Canada and use buying a business as a way to get permanent residency or citizenship. I'm not planning to move to Canada.

According to the seller 70% of the clients are US based anyway, and the team has a three folks in Canada (including the seller) and the rest are overseas.

Anyone know of any banks that would be willing to finance a deal like this? I've brought up the idea of doing a seller note, and I think the seller would be open to doing that for at least part of the purchase price, but I'm thinking that I'll end up needing some amount of financing on the deal.

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reply by an intermediary 1yr ago
from Harvard University in Fredericton, NB, Canada

Retired Cdn banker here.
I don’t know of any Cdn that would finance this. She would be very unlikely to get a loan even as the owner. It’s really too small and I expect that she’s taking advantage of every write down legally allowed. Maybe even a few discretionary ones too.
Betting there’s little to no profit showing.
This will need to 💯 owner financed.
Highly recommend you have yourself covered for any surprises once you own it. Surprises such as old inventory and/or incorrect inventory count.
I just sold a very profitable $1 million business, 30+ yr history and it took a multimillionaire to co-sign the deal.
The buyer had 40% down payment.

If you have a Canadian partner with personal guarantee it could happen. Canadian banks like to support those who don’t need them 😂

reply by a professional 1yr ago
in Montreal, QC, Canada

I agree with Roxanne, I think you'll need to do an Owner-finance model. I know of some lenders in USA that do cross-border transactions, but this ticket size might very well be too small, depending on the collateral.