Solutions

First West Capital works to finance small and medium-sized business growth, company acquisitions and management buyouts.

We work with buyers who require subordinated debt to bridge the gap between the purchase price and the combined total of available equity and senior debt, and with owners who have working capital requirements that exceed traditional financing options.

Through customized subordinated loans and mezzanine financing, we offer creative solutions to your financing needs, and an expedient local decision-making process.

How can we meet your financing needs?

I want to do a management buyout

We specialize in management buyouts involving succession from a retiring owner to a manager or management team. Friendly deals like these are favoured by First West Capital, particularly if the vendor is willing to help the transaction proceed smoothly, because you already know the employees, customers and market.

These deals are a great way for managers to acquire a company they already have experience running.

If you think there is an opportunity to buy out the company you work for and can contribute some equity to the deal, First West Capital can help. Financing the rest with a combination of subordinated debt and senior debt means you won’t have to give up a percentage of the ownership. If the business can support the loan, then you can use the company’s cash flow to pay it back.

You don’t have to have a lot of equity to close the deal. We of course like to see skin in the game, with typical a equity contribution of 25 per cent or more.  However if you don’t have this much, speak to us about a creative mezzanine solution.

Learn how First West Capital helped one entrepreneur handle a change of ownership. 

I want to buy a business

If you’re an outside buyer needing financing to buy a business or shares in a business, First West Capital can provide financing based on the business’ ability to service the debt via cash flow.

We prefer working with buyers who have either been involved in the management of the company being purchased, or who have a track record in business management.

Small and mid-sized companies typically trade at four to six times Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA). Senior debt will fund a ratio of the capital assets based on security values, and occasionally a portion of a line of credit can be used to finance a transaction. 

Vendors are often asked to carry 10 to 25 per cent of the purchase price to ensure a smooth transition, and buyers are generally required to contribute 15 to 40 per cent of the deal (20 to 25 per cent with sub-debt and less than 20 percent with mezzanine financing). The remainder is funded using subordinated debt or mezzanine finance. 

Learn how First West Capital helped a business leader acquire Terraprobe Geoscience Corporation.

I want my company to acquire another company

If your company’s growth strategy is acquisition, then we’ll assess the value of the combined entities, taking into account increased cash flow due to cost savings, increased market share, shared resources and access to new markets.

The available financing will usually be higher than in a management buyout, and in some cases could be entirely financed through us in combination with senior debt. The acquisition may be self-financed through cash flow, which significantly increases returns.

Learn how First West Capital helped a local company acquire a U.S.-based company.

I want to grow my business

Early stage companies that are just starting to turn a profit but don’t yet qualify for traditional financing, or growing companies that can’t leverage enough conventional financing for large working capital requirements  may qualify for subordinated debt or a mezzanine loan to finance their growth.

Often growing companies are profitable but struggle to keep up with demand because their senior line of credit only margins 50 per cent of inventory and 75 per cent of accounts receivable. Subordinated debt can provide the capital needed to grow.

Uses of proceeds can include working capital, R&D, product or market expansion and specialized equipment.  For companies at this stage of development, subordinated debt is an attractive alternative to equity.  Subordinated debt and mezzanine finance are cheaper than equity, tax efficient, non-dilutive and largely fixed-cost mechanisms to finance growth for companies that can afford debt. Additionally, shareholders retain full operational control.  

Learn how First West Capital helped Pro Builders expand into Alberta.

I want to buy commercial property.

For business owners with a strong history of cash flow who would like to purchase real estate, First West Capital can provide financing for with a second mortgage.

We’ll cover the down payment and find creative ways to minimize the combined first and second mortgage interest. We can help you pay down the debt quickly while maintaining or maximizing the amount of financing you have available for your business’ growth through extended amortizations up to 20 years.