Provides overview of how to:
Welcome to parametric finance i’m chris sawatzky the company’s founder and in this video tutorial i’ll give you an overview of how to secure financing for a major asset purchase using the tools and resources provided by parametric finance first a bit about us we were founded in 2008 to provide technology enables corporate finance services so the smaller companies
Could obtain the kind of sophisticated structured finance advice that larger companies often relied upon to fund major business initiatives such as expansions acquisitions or shareholder buyouts parametric finance makes corporate finance affordable to smaller companies by labeling them to conduct the financing themselves with online tools to analyze their financial
Information for appropriate financing strategies reports and templates to prepare the pitch materials recommended financing sources for the financing strategies being pursued and then it’s still necessary professional advisory services to fill in the knowledge of capacity gaps let’s see how you can use all this to secure financing for an asset purchase the process
Begins by assessing if funding sufficient for your planned major asset purchases even possible in other words we test the business models ability to support incremental financing using your internet browser go to the finance tester page at our website and enter your most recent annual financial statements into the input panel the finance testers is a free online
Tool that instantly shows the types and amounts of financing potentially available as well as the numbers of funders in our database likely to be interested in your business based on certain key criteria you only need to pay attention to the green cells which we’ve kept to a minimum consider adjusting the income statement and balance sheet to reflect how the assets
To be purchased will affect revenues cost of sales another financial statement amount over the next five years this can be done by adjusting the starting amounts and the annual growth rates if the exercise indicates a maximum financing strategy that exceeds the cost of the assets this suggests that the major asset purchase is financeable so you may want to take
The next step of refining the financing strategy it is completely confidential because data is not stored anywhere if you refresh your browser it’s gone and you have to start over so if you want to refine the preliminary strategy you’ve identified put the page similar for reference in the next step so the first step established to the financing was worth pursuing
Because the maximum financing amount exceeded the cost of the assets to be purchased however since it will be the cost of the assets that will be financed not some theoretical maximum financing amount step two involves refining the financing strategy using the finance starter this is also a confidential online corporate finance tool that features the ability to
Override the theoretical financing amounts with the intended financing amounts which you can see at the bottom of the input panel as well as adjust certain financing parameters which you can see on the right side of the input panel the finance center comes in two formats the finance that rt 12 m and the finance serger f5 why the financer dirty 12 m or trailing
12 months is like the finance tester and that requires only the historical financial statements as would already have been entered in the finance tester the finance starter f5 y or forward five years allows input of a five-year annual income statement and balance sheet forecast it improves the reliability the financing strategy were broad escalators for various
Financial statement amounts don’t apply very well shown here is the finance starter t 12 m version see our video tutorial and guide detailing completion of the finance center f5 why after purchasing a membership plan simply go to the finance dirty 12am webpage and re-enter the company and financial information from the finance tester and step 1 and you will again
See the indicated financing strategy and number of funders in the video example to the right we’ve also normalized the balance sheet by moving financial or capital leases to operating debt which is automatically refinanced in the online software and you can see that this has improved the financing capacity considerably see our guide to completing the financer t 12
M for common examples for proving financing capacity you can adjust the variable financing assumptions if you feel strongly that our market-based starting points are way off the mark see one of our guides for providing examples of the types of scenarios that might warrant an adjustment with these financing assumptions in the video example to the right we have
Left these unchanged to override the indicated maximum financing amounts in the box below the chart of funders change use indicative to use override below and then enter the specific amounts for each type of financing in the green boxes to the lower left we suggest you start with the amounts close to or lessen the amount in showing an indicative financing so as
To avoid breaching covenants which are shown in the lower right corner ideally these numbers should be white or green when you are done as red means close to breaching in the video example we’ve played around with a few numbers before settling in on the preferred financing strategy that reflects acceptable financial covenants when this is all done the financing
Strategy report can be ordered to provide all the required information and analyses and tables for use in the presentation materials that will need to be prepared to pitch the financing when all the financial analysis is done the third step is to market the presentation to prospective financing sources referencing our guide to preparing financing financing marketing
Materials found in the members only section of the website we suggest that the first pitch document repair would be the confidential information memorandum or c im a template for which can also be found in the members only section from the c im a teaser and a slide that can be easily created the financing strategy report provides all the tables to be copy pasted into
The sea im and you will just need to provide the appropriate commentary as explained in our guide the financing strategy report provides a list of potential funders whose preferences match company attributes and the proposed financing strategy parameters you will need to contact them selectively to provide the pitch documents in the appropriate way see our ebook 10
Steps to financing your business for how this is best done before you know it you’ll have a bunch of meetings and their crest for the cm which if successful will lead to a number of financing proposals the final step of the financing process involves the documentation work required to close the funding this begins with the term sheets or financing proposals received
After presenting the financing to prospective lenders or equity investors the meetings and financing proposals will give you a good feel for your preferred funders but we still recommend that you back test the financing in the finance starter version originally used just to make sure the proposed financing reflecting the proposed terms as much as possible will still
Work well for the company executing the preferred financing proposal or proposals will then lead to formal legal documentation and thunder due diligence this will vary widely by the type of company asset intensive business may require appraisals company owned properties may require environmental assessments and of course security registrations will be necessary
Be patient as this process can be somewhat time consuming and costly but unavoidable and ultimately worth it in the form of a funding for your major asset purchase so to summarize the overview of financing a major asset purchase the first step is to test the company’s capacity to undertake the purchase if it turns up negative carefully review your financial inputs
In terms of your starting historical numbers and growth rate assumptions and see our guide to completing the finance tester for ideas and how to improve financing capacity if the finance test returns up positive and you like to pursue a financing with our help then the second step is to refine the financing strategy using one of the two versions of the finance
Starter under suitable membership plan this will allow you to adjust financing assumptions enter the specific financing strategy and access a host of guides and templates once you’ve settled on a satisfactory financing strategy purchasing the financing strategy report will enable the third step of the process which is to prepare the presentation materials and
Pitch the financing to a selection of prospective funding sources which will have been provided in the financing strategy report upon receipt of financing proposals the fourth step is to evaluate and select among these financing proposals and proceed with the preferred ones through a legal documentation and funder due diligence process which it ultimately result
In completion of the financing process and funding of your major asset purchase i hope you found this video tutorial to be helpful and we would welcome your feedback to help us improve to learn more explore the other resource materials at our website or call us to discuss your financing requirement
Transcribed from video
Financing Major Asset Purchase with Parametric Finance By Parametric Finance Inc.
