Showing posts with label Financial Advisory Services. Show all posts
Showing posts with label Financial Advisory Services. Show all posts

Friday, 25 August 2017

What Venture Capitalists Look For In New Investments?

If you’re thinking of bringing in new investors, they’ll want to know how much your business could increase in value if they buy shares. To work this out, they’ll need to know how much their investment will increase your sales and profitability. Just provide potential investors and lenders with a financial model presenting how business will use the more money to boost profitability and sales. Also, how initial prices and augmented ongoing prices will affect the cash flow. Usually, sales increases only after taking on additional expenditure like employing more staff, putting in huge orders for raw materials or moving to bigger premises. So, there is a need to take all these spending in control while doing financial planning.

Often, growing your business means it needs more investment, whether through improved profitability or increased sales. It can be done by taking out a loan, putting previous profits back into business, put up shares for sale to outside investors as well as searching for other financing sources including government-backed schemes.


Now days, landscape of business financing is changing drastically as more options are available to business owners which were very limited few years back. Almost half of businesses are seeking financing from several no. of places like owner investments, non-bank sources etc.  Most of the businesses face challenges while taking advantage of growing opportunities and also at the time of gaining access to capital. So it’s really important that they seek the right way of financing according to their needs. Recently, it has been seen that businesses are focusing on “alternative” lending option, but the question is how do they know that is this the right option to pursue?

Answer to this question is that businesses should seek financing when they face an unexpected challenge or opportunity because at that time there is a need of quick capital. It has been seen that most of the time; businesses don’t have enough cash on reserve or any other source of credit that will help them in withdrawing required funds during these types of opportunities. These alternative fund lending sources help in filling that void by giving access, speed availability to business owners. 


To verify what kind of financing makes sense for business as well as situation, one must consider the exact need of the funds and the timing. Alternative fund lending sources helps in providing repayment flexibility and offering creative options that fluctuates along with sales volume. It's also in need to understand the rates that are associated with while choosing other source of fund lender. This type of funding is often costly than old-fashioned bank loan as these companies act as borrow capital, liaisons from several other financial institutions which guarantees the payment. Basically, when the client defaults, they absorb the risk as well as the losses.

Angel investors find interest in the next generation ideas and willingly fund startup ideas they find worth. They usually focus on technology startups. Although the process of receiving funds from an angel investors might be straightforward, but they always expect to see complete business plan along with financial projections. This funding option is perfect for technology-focused businesses, but still need guidance in product creation and marketing. Apart from providing money, angel investors also give guidance to that business owner looking for more experienced partners. They might also anticipate a certain degree of influence on how the company is running.

Moreover, as a founder your main goal should be growing more and more professional network. At the time of need for funding, you never know who might be next funding opportunity or source. Also, some investors can be a public figure who can be reached online. Several other investors mainly anonymity and it’s quite hard to search for any kind of information about them.


Alcor M&A is a leading advisory firm providing financial services with an emphasis on customized solutions in the areas of M&A advisory, Joint Venture Advisory, Financial Advisory,  Private Equity,   Debt Financing and International Business Development. These services leverages insights, relationships and a culture that emphasizes a strong orientation towards excellence.

For additional information on how ALCOR MNA can help you Grow your Company, Complete the Enquiry form One of our representatives will contact you within one business day.  
                 

Monday, 31 July 2017

Raising Capital for Your Small Business Venture

Today there is a huge amount of money in the market of start-up funding across all stages of funding. Although there are a lot of financing options for start-up businesses available but it’s up to the investor or the owner to decide which option is to be considered. One such option is venture capital, so let’s get an idea about the elephant in the room namely Venture Capital firms. Venture Capital is a type of financing which is self-explained. Actually, it has firms or funds that offer venture capital which is high-risk capital supporting organizations and companies with the hope that they will provide a huge return on investment (ROI).


The available financing needed for covering short-term or immediate business requirement is referred as working capital. In order to determine how much working capital is available sum up your bank cash along with the money that customers owe you and your inventory value, after that subtract what you owe to employees and suppliers. Small business owners always make sure that they have sufficient cash for not just starting a business but also keep it going. Lastly, you can also cover your business requirement with the help of personal funds by potentially harming your wallet.

Working of Venture Capital firm

Within a Venture capital fund, there are two main elements: limited and general partners. People who are in charge of taking investment decisions as well as work with start-ups business for growing and meeting their goals are called as general partners. On the other hand, those who give required capital necessary for completing those investments are referred as limited partners. One can also say that limited partners offer the funds while general partners do the investments. One of the major differences among Venture Capital funds and other investment vehicles is that Venture Capital funds do not invest own partners’ money in case of limited partners while general partners use to invest few of the amount through the fund which is approx 1% of the fund.


How Do Venture Capital Firms Make Money?

A venture capital fund makes money in two ways: carries (carried interest) and management fees.
Carry or carried interest: It is a profit share of an investment fund or investment paid to the manager in surplus of the amount that he contributes to the partnership. In Venture Capital, carried interesting is mainly 20-25 %, which means the profit percentage among limited and general partners is 20% and 80% respectively.
Management fees: It is usually termed as the ‘cost of professionally managed assets’. Typically, venture capital funds pay management fee annually to the fund’s management company, in the form of salary and a method to cover fund and organizational expenses. It is usually computed on a capital commitments percentage of the fund which is about 2-2.5 %.


Influence on Startups

It is very important that business start-ups should identify the working of Venture Capital firms. Investors with one key objective in mind back start-ups for getting an ROI either in the form of money. It’s also important to note that Venture Capital funds have 10 years of fixed life, thus creating investment cycles lasting for about 3-5 years. After this firm start working alongside the business startups and the owners will scale & seek an exit, giving the returns they sought initially. Moreover, there is enough potential in venture capital firms, but it is essential to make sure that the chosen path is right for business start-up. Venture capitalists in exchange for the high risk they have taken by investing in your company, they basically get considerable control on decisions of the company. The venture can surely be a smart option for business startups that are willing or unwilling securing bank loans or completing debt offerings.


Often, working capital is quite difficult to find so it’s better to know the options that are easily available. It’s essential to understand certain characteristics because management of working capital might be a difficult thing so you can take benefit of in order to ensure that your business venture is fully efficient in improving working capital.


For additional information on how ALCOR MNA can help you Grow your Company, Complete the Enquiry form. One of our representatives will contact you within one business day.
                     

Saturday, 29 July 2017

Debt vs. Equity Financing: What's the Best Choice for Your Business?

It has been observed that financing business startups is not so easy feat. If one can swing it, bootstrapping is the best option but no matter what, one will require small amount of money for turning idea into somewhat tangible. If funds are not rolling in yet, it’s hard to make a top notch product. That is the reason why many startups and small businesses provide equity to investors and employees. It might possible that even if investors from outside are not for you, but still you may be interested in providing equity to employees. But the question is, how will you do it? If you are running a smaller business and are thinking to offer equity then stick with all your financing options. Many entrepreneurs think that the best and common form of raising money for their startup is equity financing. It involves the usual pitching to venture capital firms and investors for raising money in exchange for equity in company. However, this is not the only way of raising money for company rather debt financing can help in other cases also.


Equity Financing

As it is said that private equity financing is not for all but it provides greeting option for debt financing to several business owners. In fact, private equity financing against debt financing cannot be charged with two major gripes business owners’ level due to risk with personally guaranteeing a loan and the constraint placed by it on available cash flow. If you have a great idea for running a startup business but don’t have enough cash for funding your business then equity is the best solution for you. The main two common equity types are:

Equity Financing: In this, in order to finance your startup business, you need to sell shares to outside investors.

Equity Compensation: In this, one has to offer percentage of company profits in exchange of less salary.



Private equity eradicates the drawbacks of debt in that and for paying down debt, it does not divert capital from the business rather it shares risk in the business along with the entrepreneur. Another advantage of private equity is that you don’t need to pay right back to investors after they provide funding to your business. It means that one has more time for growing his business before he starts worrying about how he will how he will pay for it or not.  And in case business fails totally, one doesn’t have to repay. It is fact that investors either swim or sink or alongside the business owners.

Debt Financing

Debt financing is money that has to be pay back and it can take the form of a line of credit, a merchant cash advance, a loan, or a credit card. Using loan for obtaining capital or growth funds for starting a business is referred as Debt financing. Debt financing allows businesses to get the money they require for their business without giving away equity. Provided businesses can continue with the payments of interest and pay off all they owe and will get to maintain all the remaining proceeds in the coming years.
A number of sources are there for obtaining debt financing for your business. Some of the sources are outlined below:


Private Lenders: It can come from lenders such as family members, friends, colleagues, relatives, spouses, and private donors from whom you can connect with for raising funds.

Traditional Lenders: It includes banks that may do advance financing in the various business forms such as lines of credit and secured as well as unsecured loans.

Personal Financing: One can choose this from for obtaining personal loans from traditional lending sources or can use credit cards for financing business using debt.

Modern Lenders: this type includes payday loan lenders and peer-to-peer lenders.

Moreover, private equity is actually an umbrella term for huge money raised directly from recognized institutions & individuals and pooled in a fund that mostly invests in certain range of business ventures. For considerable long-term gains, attraction is the potential. Generally the fund is placed as a limited partnership, with the investors as limited partners and a private equity firm as the general partner. Typically, private equity firms charge huge amount of money fees for taking part in partnership and be inclined to focus in a particular investment type. And debt financing has its advantages as well as disadvantages; it’s up to you whether you choose this kind of financing for your business startup will work for your requirements.


For additional information on how ALCOR MNA can help you Grow your Company, Complete the Enquiry form. One of our representatives will contact you within one business day.
                            



Wednesday, 26 July 2017

Equity Financing vs. Debt Financing

Today, entrepreneurs look for two options when it comes to raise funds for their business namely, equity or debt. A loan which is to be repaid on specified time along with interest is referred as debt while in exchange of money; the ownership portion offered to investor is called as equity. Most commonly debt is being used during bridge rounds and seed investment rounds for getting an organization from a Series A to B to C with the help of venture capital firm. Mainly, debt is used to reduce the dilution of an organization’s founders as well as existing investors because the share of existing investors becomes smaller, every time equity is being issued. On the other hand, equity is being used for reducing the risk of cash flow related with the interest payments on debt. It has been observed that most of the time a startup business uses a combination of equity and debt financing as they grow. This combination might be seen as prudent because they are used in different funding situations and for that one must know the pros and cons of each alternative.


Startup Equity: When to Use Equity to Fund Your Business

Equity might prove to be benefited as it permits an organization to place certain resources back into business while debt financing limits cash flow by making mandatory for investors in getting repaid on a specific time. The flexible nature of equity financing allows an organization to develop at fast rate rather paying cash every month. Many organizations choose to issue private equity as either they presently have limited cash flow, or in concern of future cash flow limitation. It has been observed that investors mainly favor private equity in the preferred stock form but in certain cases instead of this common stock is being distributed.

As long as private equity investment wait, the ROI grows along with an organization they back. The private equity amount decides the size of investor’s voice in an organization and those who have large shares might be serving the role of board member or mentor in the company. And it usually happens that as the investor has a portion of ownership so before taking any kind of big decisions, the organizations asks them or consults them.


Download Free Ebook - A Guide for Private Equity Financing


Drawbacks of Equity as a Funding Source

Despite so many advantages, equity investment does have certain drawbacks. One of the biggest cons of equity financing is the possibility that your investment might not be paid back in case the company is not obligated to pay you back, if it fails. Also, every time during an additional investment round bring in new shares, the previous ones are diluted carrying less value. Lastly, it takes longer time to close equity deals and the legal cost is quite high as compared to debt financing.

Startup Debt: When to Use Debt to Fund Your Business

Debt financing is money that has to be pay back and it can take the form of a line of credit, a merchant cash advance, a loan, or a credit card. Using loan for obtaining capital or growth funds for starting a business is referred as Debt financing. Debt financing allows businesses to get the money they require for their business without giving away equity. Provided businesses can continue with the payments of interest and pay off all they owe and will get to maintain all the remaining proceeds in the coming years.


Drawbacks of Debt as a Funding Source

Payment obligations: Lenders expect that you pay off your debt like clockwork even in difficult times as they don’t have stake in the business.

Assumption of all losses: You are the sole responsible for the all the risks, when you are the only owner of the business. When you fail then not only you need to assume your losses, but those of lenders too, as they can sue you if you can't complete your agreement.

Many entrepreneurs think that the best and common form of raising money for their startup is equity financing. It involves the usual pitching to venture capital firms and investors for raising money in exchange for equity in company. However, these are not only way of raising money for company rather both equity and debt financing can help in other cases also. Additionally, nothing is perfect so as the investment structures whether debt or equity financing. 


So is your business suffering from Funding problems? ALCOR MNA is experienced in finding the best Investors for companies and small businesses. We provide a broad spectrum of comprehensive fundraising solutions to cater the capital requirements of different companies across industries.

Are you looking for a Financing Options?


For additional information on how we can help you finance your Company, Complete the Enquiry form. One of our representatives will contact you within one business day.


Tuesday, 25 July 2017

Challenging Myths about the Funding Of Small Businesses

If owner of a small business is constantly searching for new methods for growing his company then working capital loan is something after which he won’t look further. A highly efficient way for growing his business and generating capital is by securing working capital with a line of credit or a loan. Growing your working capital will secure your small business during the sluggish months, making sure that you can cover up your everyday operational costs such as payables, payroll, and receivables. Also, it will help in mitigating your cash reserves for unavoidable circumstances you might face while doing expenditure on your business.


The available financing needed for covering short-term or immediate business requirement is referred as working capital. In order to determine how much working capital is available sum up your bank cash along with the money that customers owe you and your inventory value, after that subtract what you owe to employees and suppliers. Small business owners always make sure that they have sufficient cash for not just starting a business but also keep it going. Lastly, you can also cover your business requirement with the help of personal funds by potentially harming your wallet. Often, working capital is quite difficult to find so it’s better to know the options that are easily available.

It’s essential to understand certain characteristics because management of working capital might be a difficult thing so you can take benefit of in order to ensure that your business venture is fully efficient in improving working capital. A lot of myths are there related to funding and working of small business. But the prime need of any business is working capital and if involve into myths, your venture will surely suffer. Following are few myths about safe as well as unsafe business loans:


Banks Are My Only Option

Banks loans are the traditional assumption as they don’t offer loan for small businesses. But the fact is that there are plenty of funding options and even if one has well-developed business as well as strong credit, still applying for bank loan is very hard as you require collateral and a personal guarantee. The bank loan process is worse as it is so slow, if one is seeing a long- term financing because you need money quickly.

Not Getting a Business Loan Because the business is Too Small

It has been observed that the amount matters a lot while applying of loan whether too small or too big. Because size matters a lot in small business loans but on the other hand alternative lenders don’t see the size of business rather they look at your repaying ability. You must borrow the required amount for  the right purpose what you have.


Doomed Because Of Bad Credit

This is true for bank loans, but automatically not for those small business loan types. The right thing about the right business loans might help in rebuilding bad credit.

No Having a Fancy Business Plan

Unless you are not taking a bank loan, you don’t require a fancy business plan but yeah you need goals along with a plan in order to achieve them. The fact is that smart borrowing may turn either into boom-or-bust for steady and smooth growth of a business.



Moreover, now you are aware of common myths about small business loans and it solutions which can help in getting the working capital you require at time of your business need. In this way you can opt for right funding option to make your business successful and profitable in the future. ALCORMNA is there as an alternative for funding your business to traditional financing methods. Our flexible, fast as well as easy capital options proffer the fund you need. And we make it sure that our short-term repayment means that you will grow sooner and faster. The funds can be used for any kind of business you want to do and it doesn’t require any proposal or business plan. Moreover, if you require extra cash in order to help in growing your small business, ALCORMNA is here to help.

So is your business suffering from Funding problems? ALCOR MNA is experienced in finding the best Investors for companies and small businesses. We provide a broad spectrum of comprehensive fundraising solutions to cater the capital requirements of different companies across industries.

Are you looking for a Financing Options?

For additional information on how we can help you finance your Company, Complete the Enquiry form. One of our representatives will contact you within one business day.


Friday, 21 July 2017

How Cash-Flow Projections Can Help Grow Your Business

Cash inflow is the lifeline of your startup business and it comes from various sources such as receipt of a loan, interest on savings, payments from customers, monetary infusion from an investor, and investments. Cash is essential for running your business as you get payment option for various expenses such as stocking raw materials, the salary of employees, office rent, and other operating expenditure. In fact, positive cash flow is good as it indicates that your business is running smoothly. Also, when it occurs in a large amount, cash flow is better as it will permit you to do other investments such as hire new employees or open branch on other location and helps in growing your business further.


Understanding Your Cash Flow

Typically, cash transfer in and out of your start-up business can be put in order into following three categories:

·         Operating cash flow: Cash associated with everyday operations of your start-up business like  gathering from clients and paying expenses

·         Investing cash flow: Cash associated with the sale or purchase property, plant, equipment

·         Financing cash flow: Cash transfer in and out to investors such as loans, line of credit as well as  equity




All these categories and cash usage can be coupled to provide a detailed picture of how cash flow varies time to time. This variation can give you a clear picture of how much amount of cash your business actually has. This information will not only help you in understanding the current and past cash flow but also in projecting your future needs.

Projecting Your Cash Flow

Typically, the cash flow projections are driven by your operating cash flow. Ideally, operating cash flow is being projected either weekly or monthly for determining whether you need support from funding activities. As investing activities are designed on this basis for several businesses. Until and unless you are not in a progressive growth phase that needs the purchase of assets, you will not have enough cash for further investments. As this tends to be larger transactions, they have a considerable impact on cash flow of your business.

Usually, it has been observed that financing activities refer as plug in the model of your business cash-flow. Any insufficiency in investing or operating cash flow can be covered with money from various financing activities. As it takes time in finding potential lenders or investors in getting cash, it’s better to know in advance how much and from where your business will get funding for balancing its cash flow.


Cash-Flow Tips

Cash flow depends totally on time. Specifically, when a transaction takes place, you don't feel its impact immediately. While projecting the cash flow of your business, do consider the following things:

Be Conservative

Vendors want that the customers pay early but customers mostly pay late. Usually, it does not happen the other way around. It can be essential to create assumptions considering negative cash flow for ensuring that you have enough credit for covering that cash shortage.


Include a Minimum Cash Balance

While projecting cash flow of business, always remember that one will never complete month with negative cash flow. If the cash flow you are operating with is negative, then you can consider compensating all the way through asset sale or by borrowing cash.

Moreover, management of cash flow is critical for your business and considering your business expenses allow you to plan for future expenditure and know the projected profit from that business which in turn will help in managing your cash flow.

So is your business suffering from Funding problems? ALCOR MNA is experienced in finding the best Investors for companies and small businesses. We provide a broad spectrum of comprehensive fundraising solutions to cater the capital requirements of different companies across industries.

Are you looking for a Financing Options?

For additional information on how we can help you finance your Company, Complete the Enquiry form. One of our representatives will contact you within one business day.




Thursday, 20 July 2017

How to Finance a Management Buyout

Today, thousands of employees despite long working hours, stress and pressures constantly dream of becoming a boss of their own and day by day most of them are converting it into reality also. The management buy-out attraction is that business owners have an option of buying a business they know inside out rather than setting up from scratch.  


An MBO (Management Buyout) is also preferred way out to the problem of management succession in private or publicly owned business. Although trade sale is one the options but a profitable business is run by excellent management. This may create a better opportunity for the management team that exists to raise funds for purchasing the business. Stability of good management decreases the risk of the buyer and the chance within that business compels the management team to fight with trade buyers. In fact, an MBO is considered to be the best way for managers to be the owner of their business but the process is quite complex in the transaction. Often it has been observed that the process is severely demanding and simultaneously managers also need to run their business.


If for the first time, any management team is considering a buyout then they should follow these initial steps:

·         Organize main transaction objectives on a precise briefing paper.
·         Get hold of preliminary, self-determining advice on the project feasibility.
·         Be practical in the business valuation.
·         Think about for how long and how much finance is needed.
·         Consider monetary priorities and explore all available financing options.
·         Always keep in mind that the business plan can stand up to the scrutiny of a potential funder.
·         Take on due diligence to measure areas of financial and commercial risk.
·         While negotiating, be conscious with the vendor’s objectives.
·         Keep calm and have the patient as at some stages, the transaction may encounter problems.
·         Don’t spend time on the business deal at the cost of existing commitments.


      Funding Alternatives

Most of the conventional financing options used by smaller organizations for covering operational expenditure are not appropriate for financing an MBO. Overdrafts are inappropriate; generally they are temporary funding arrangements and long term loans are only an option. If a business owner is unable to repay the money which he wants to raise for the shorter duration, then long-term funding source may be the answer. Also, it has been observed that few individuals use personal equity for financing an MBO. The key benefit is that a person is not indebted to other business. However, this might be risky and in the case of business, failure can leave the person critically out of pocket and in the worst-case situation the person will be bankrupt.


Most commonly, the funding source related with management buy-outs is venture capital. Traditionally, as company owners have sought financing sources for their business all the way through bank loans or overdrafts while considering an MBO, management teams may normally look for the venture capitalist. However, venture capitalists will generally request for a seat on the board and a considerable stake in the business and most entrepreneurs dislike the plan of handing a part of their company to an angel investor. Moreover, debtor finance permits management buyout teams to borrow against the sum owed by customers. Also, it can fill the gap among what the bank will lend and what management can afford and help persons to avoid investing larger amounts of private equity. With the accurate financial support and skilled advice, an MBO can be very satisfying and proffer a lifetime opportunity for taking ownership of known business and seeing it thriving and succeeding.

So is your business suffering from Funding problems? ALCOR MNA is experienced in finding the best Investors for companies and small businesses. We provide a broad spectrum of comprehensive fundraising solutions to cater the capital requirements of different companies across industries.

Are you looking for a Financing Options?

For additional information on how we can help you finance your Company, Complete the Enquiry form. One of our representatives will contact you within one business day.


Friday, 14 July 2017

HOW DOES A VENTURE CAPITAL FIRM WORK ?

Today there is a huge amount of money in the market of start-up funding across all stages of funding. Although there are a lot of financing options for start-up businesses available it’s up to the investor or the owner to decide which option is to be considered. One such option is venture capital, so let’s get an idea about the elephant in the room namely Venture Capital firms.

Venture Capital is a type of financing which is self-explained. Actually, it has firms or funds that offer venture capital which is high-risk capital supporting organizations and companies with the hope that they will provide a huge return on investment (ROI).



Within a Venture capital fund, there are two main elements: limited and general partners. People who are in charge of taking investment decisions, as well as work with start-ups business for growing and meeting their goals, are called as general partners. On the other hand, those who give required capital necessary for completing those investments are referred as limited partners. One can also say that limited partners offer the funds while general partners do the investments.

One of the major differences among Venture Capital funds and other investment vehicles is that Venture Capital funds do not invest own partners’ money in case of limited partners while general partners use to invest few of the amount through the fund which is approx 1% of the fund.



A venture capital fund makes money in two ways: carries (carried interest) and management fees.

Carry or carried interest: It is a profit share of an investment fund or investment paid to the manager in a surplus of the amount that he contributes to the partnership. In Venture Capital, carried interesting is mainly 20-25 %, which means the profit percentage among limited and general partners is 20% and 80% respectively.

Management fees: It is usually termed as the ‘cost of professionally managed assets’. Typically, venture capital funds pay management fee annually to the fund’s management company, in the form of salary and a method to cover fund and organizational expenses. It is usually computed on a capital commitments percentage of the fund which is about 2-2.5 %.



It is very important that business start-ups should identify the working of Venture Capital firms. Investors with one key objective in mind back start-ups for getting an ROI either in the form of money. It’s also important to note that Venture Capital funds have 10 years of fixed life, thus creating investment cycles lasting for about 3-5 years. After this firm start working alongside the business startups and the owners will scale & seek an exit, giving the returns they sought initially. Moreover, there is enough potential in venture capital firms, but it is essential to make sure that the chosen path is right for business start-up. Venture capitalists in exchange for the high risk they have taken by investing in your company, they basically get considerable control over decisions of the company. The venture can surely be a smart option for business startups that are willing or unwilling securing bank loans or completing debt offerings.


So is your business suffering from Funding problems? ALCOR MNA is experienced in finding the best Investors for companies and small businesses. We provide a broad spectrum of comprehensive fundraising solutions to cater the capital requirements of different companies across industries.

Are you looking for a Financing Options?

For additional information on how we can help you finance your Company, Complete the Enquiry form. One of our representatives will contact you within one business day.