How to Use Asset Equity to Purchase Another Business

How to Use Asset Equity to Purchase Another Business

Expanding your business through strategic acquisitions can be an exciting and lucrative venture. If you’re considering purchasing another business but need funding to make it happen, accessing your existing asset equity could provide the funding you need to make it happen. 

How Do I Use Asset Equity to Expand My Business?

Using asset equity can be an effective strategy if you’re considering growing your business portfolio by expanding or updating your current equipment fleet or looking to buy another business. Here’s how you can use it to finance an acquisition.

1. Assess Your Existing Assets

Begin by evaluating the assets currently held by your business. These assets include:

  • Real estate 
  • Equipment 
  • Inventory 
  • Intellectual property
  • Valuable holdings
  • And more 

Determining the market value of your current assets sets the foundation for calculating your equity position.

2. Calculate Your Equity Position

Your equity position is the difference between the market value of your assets and any outstanding business liabilities such as loans or debts. This figure represents the portion of your business that you truly own outright.

3. Explore Financing Options

Once you’ve determined your equity position, explore the financing options available. Equify Financial will assist you in exploring opportunities specific to asset equity financing. We will take the time to fully understand your unique business and then help you develop a financing plan that considers growth prospects.

4. Find a Creative Lender

Find a lender, like Equify Financial, who can create tailored solutions for you. Our representatives have experience using equity as collateral to build creative solutions for customers looking for unique ways to finance their equipment needs. 

5. Negotiate Terms

Negotiate financing terms that align with your business goals and growth strategy. Be prepared to discuss the proposed acquisition in detail, including how it will add value to your existing operations and contribute to overall business growth.

6. Execute the Acquisition

Once you’ve secured the necessary funding, it’s time to proceed with the acquisition process. If you are considering buying an additional business, conduct thorough due diligence on the target business to assess its financial health, operational efficiency, and market positioning. Work closely with legal and financial advisors to ensure a smooth transaction. 

Benefits of Using Asset Equity for M&A

You can experience many benefits when you use equity to grow your business: 

  • You Maintain Control. Financing based on asset equity can give you access to funds without additional obligations. The equity in your assets is used as collateral for your loan, but you maintain ownership and usage of your equipment.
  • Unlock Business Growth Potential. Acquiring another business or updating your current equipment can unlock new markets, customer segments, or complementary products and services to drive revenue growth and keep you at the top of a competitive market.
  • Diversify Your Business Portfolio. Adding a new business to your portfolio diversifies risk and creates opportunities for new partnerships and operational efficiencies.

With careful planning and execution, asset equity financing can get you the working capital you need for sustained business success and expansion.

Partner with Equify to Grow Your Business

If you’re wondering just how much equity you have available in equipment and real assets, talk to our team of experts. We’re available to provide guidance and support to help you navigate the complexities of structured finance options for strategic business growth.