Venture capital investments are made by Finnvera's subsidiary Veraventure.
Company acquisitions and changes of ownership
When companies are reorganised, the need for financing typically stems from payment of the purchase price, simultaneous investments, and demand for working capital. To finance these situations, an enterprise can apply for Finnvera’s loans and guarantees.
The future owner of the enterprise should contact potential financiers at the outset of the project. A prerequisite for arranging financing is that the project is well planned and that provision has been made for the risks involved. The owners’ commitment and a sufficient share of self-financing are essential for implementing the project.
The transaction itself can be an acquisition of business or an acquisition of shares
In a business acquisition, the items sold are usually the machinery and equipment needed for running the company’s business (or part of it), inventories, and possibly other balance sheet items. Often the price paid for these is higher than their balance sheet values; this difference is known as goodwill. Technically a business acquisition is usually carried out so that the buyer establishes a new company in whose name the transaction is concluded. In that case, the buying company can use, for instance, its own mortgages on company assets as collateral for financing.
In the acquisition of shares, sellers usually sell all shares in their possession or the entire stock of the company. The price paid for the shares of even small companies can be so high that covering the sum by means of a personal loan is not sensible or even possible. The alternative often applied in these cases is to use an auxiliary company in whose name the shares are bought. The collateral risk is usually great because the collateral of the company to be acquired cannot be used as security for the financing needed by the buyer.
Often the financing needed by the buyer can be reduced through various measures. These include redemption of the company’s own shares within the limits allowed by the Limited Liability Companies Act before the rest of the shares are sold. Another way is to split the company so that assets not included in the business proper are set apart to form a company of their own.
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www.yrittajat.fi/yritysporss
i (only in Finnish and Swedish)
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