Mergers: What To Do With A Surplus Of Assets

December 28, 2017 by CNH Finance, LP in category “Financing”

Business mergers are a great way for two or more entities to join forces and achieve a common goal, instead of generating a fraction of their potential earning as separate entities. However, business mergers often result in a surplus of management, staff, equipment, and more. Instead of selling off valuable equipment and other assets, many entrepreneurs are tapping into their hidden value to create working capital.

Business Mergers And Fixed Assets

Over the course of a business merger, all entities involved typically run an analysis of assets such as equipment, vehicles, owned facilities, and more. The point of running such reports is to see which equipment is redundant, what can increase productivity, and what can simply be sold off so it doesn’t become a liability. Business mergers also require capital to maintain operations and fill customer orders during the transition period. Taking out a traditional loan places debt on the books and can become very cost-prohibitive in a short period of time. Floating a cash advance for short term capital is also unwise, because of the many fees and balloon payments. As an alternative, business owners are asset based financing to create a reliable source of working capital during mergers. Asset based financing, like the term implies, offers financing by leveraging the value of fixed assets and equipment. The intrinsic value is used to create a revolving line of credit. During business mergers, having increased purchasing power to cover immediate expenses is vital to continued success.

Taking Advantage Of Newfound Growth

Business mergers allow companies to grow and increase revenue. Asset based financing is the only working capital solution that actually grows with your business. After mergers, when businesses see an increase in receivables, equipment and other assets, the financing available through an asset based line of credit will also improve. Asset based financing is a logical solution during business mergers, not only because the number of assets increase, but because it also reduces the need for short term loans and similar lending vehicles.

Learn More About Asset Based Financing

If you have a merger in your near future, and are looking for a reliable source of working capital without debt, contact the experts at CNH Finance. Our team handles business mergers throughout the country, to ensure all parties have the working capital they need for a smooth and efficient transition.

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