The M&A industry of the United States is valued at $1.82 trillion and is one of the leading sectors for the economy. The hospitality industry, similarly, has been growing year on year. The increase in demand for travel has led to an increase in demand for hotels, motels, resorts, etc. Owing to the spike in demand for hospitality services, company valuations have also increased significantly. Acquiring another player in this industry is an expensive investment that must be made after careful consideration.
Financing is the main concern when undertaking such changes. Here are some financing options for you:
Bank loans are the first consideration of organizations. Term loans for business acquisitions range anywhere from 5 to 25 years with fixed or floating rates. The interest rate on these loans is determined based on the performance of the business and their credit rating.
However, bank loans aren’t that easy for businesses to secure. The banking industry is highly regulated, and therefore there are many requirements clients need to meet before being granted a loan by a traditional bank. They often don’t provide the entire loan amount either— so be prepared to dig into your own funds.
Private lending has become more popular due to the lack of financing by traditional banks. The private lending industry is more welcoming when it comes to commercial loans.
The loan application process with private lenders is much simpler and quicker with a private lender since one agent has to sign off on the loan application. Rejection of loan applications is rare in this industry as lenders have a higher appetite for risk.
Certain lenders are willing to represent buyers at all stages of the acquisition process since they have international lenders. Having a big pool of lenders means there’s always capital on hand to lend out.
Another financing route that can be used for hospitality acquisitions is to sell your company’s. It’s a relatively cheaper financing option in monetary terms. However, you are giving up control of the organization as a result. Some experts say that using equity for financing an acquisition is counterproductive since you’re risking being run by shareholders. When you’re selling equity, be mindful that the majority shareholder might well be a competitor.
Global Capital Partners Fund LLC is a private money lender based in NYC that provides financing solutions for the hospitality industry. Whether you are looking to acquire hotels, cafes, motels, nightclubs, bars, or restaurants, GCP can help you out. They have been in the lending business for over 3 decades now and can provide financing no matter what stage of the acquisition process you’re in. they can provide loans from $1,00,000 to over $100,00,000. Their other financing solutions include construction and development financing as well as bridge loans.
Contact a senior partner at GCP today at +1-800-514-7350 to learn more about our hospitality acquisition funding programs.