Growing your business through tax efficient external financing
The right sources of capital investment can make or break a business
Many middle market businesses choose to finance growth organically. For others, outside investment is critical to help provide the funding needed to reach the next level of success. Should you turn to banks, private equity firms or individual investors for external financing? And how will those choices affect the tax position of your business?
There are many factors to consider:
- How much control are you willing to give up or share?
- What is your risk tolerance?
- Will funding be required long term or just for a fixed project?
- Are there investment incentives available to financing partners?
- Does the location of your investors matter?
External financing changes the shape of your business tax profile. Know what is important for maintaining tax efficiency and why.
In the post-2008 regulatory environment, nonbank lenders have become an increasingly important source of loans for middle market borrowers.
These questions can help determine whether you are prepared to move forward with an acquisition, and if not, provide a road map to achieve readiness.