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What Is a Business Finance Consultant?

By K. Kinsella
Updated Mar 03, 2024
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A business finance consultant provides a variety of financial services to business owners. Consultants provide advice to people who are attempting to start new businesses and help these individuals to obtain the necessary financing that they need to cover the start-up costs. Large firms also employ consultants prior to mergers, acquisitions and other major events.

Lenders are typically reluctant to extend financing to new businesses because these firms have no history of generating profits and no proven ability to repay debts. Consequently, many business owners rely on their own personal funds to cover start-up costs but a business finance consultant can help a business owner to identify other sources of financing. Some consultants act as brokers and negotiate deals with finance companies and private investment firms. The consultant normally receives a commission for arranging such deals from either the lender or the business owner.

Despite the involvement of a business finance consultant, some lenders are reluctant to lend money to new businesses. Therefore, consultants help business owners to find investors who are prepared to invest funds in the company in exchange for an ownership stake in the entity. Many consultants specialize in helping businesses that operate within certain industries. Consultants that are familiar with a certain industry can offer advice to clients that is based upon the experience of dealing with other clients. These consultants also develop strong industry connections which means that consultants can assist start-up businesses by generating referrals and encouraging business partners to work together and develop mutually beneficial business relationships.

The board of directors of a major corporation normally consult at least one business finance consultant before attempting to acquire another firm. A consultant can provide some insight into the target firm and assist the corporation with obtaining financing. When privately held firms are floated on the stock market, consultants attempt to generate interest in the Initial Public offering (IPO) by seeking out investors and providing prospective shareholders with information about the company. A business finance consultant may also advise a firm to delay an IPO if economic or industry conditions are not conducive to such a move.

Business finance consultants also provide owners of both large and small businesses with advice on day-to-day matters that could impact the profitability of the business such as legislative changes or tax increases. Some firms employ full-time consultants while others do not employ in-house consultants and instead hire freelance contractors as needed. Consultants usually have a background in either finance or accounting. Many have college degrees and other industry specific licences and certifications.

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