ACQUISITION FINANCE
HOW MUCH OF YOUR OWN MONEY DO YOU ACTUALLY NEED?
Funding is often one of the biggest questions buyers face. How much capital will you need? How much could potentially be borrowed? What can the business realistically afford to repay? Could seller finance or deferred consideration reduce the day-one cash requirement? Transition 360 Partners can help you understand the funding requirement and introduce appropriate acquisition finance specialists where required.
Confidential initial conversation. No obligation.
FINANCE THE DEAL BEFORE YOU FALL IN LOVE WITH IT
Finding a business first and asking how to fund it afterwards can waste months.
This allows the acquisition search to concentrate on businesses you can realistically buy.
THE PURCHASE PRICE ISN'T THE ONLY NUMBER
An acquisition may also need to fund much more than the purchase price.
CAN THE BUSINESS AFFORD THE ACQUISITION?
The question isn't simply whether a lender will provide the money.
The question isn't simply how much a lender will lend. The question is whether the business can comfortably support the finance after you've bought it.
The business still needs sufficient cash flow after completion to repay debt, fund working capital, invest in the business, deal with unexpected costs and provide an appropriate return to the buyer. This is where acquisition modelling matters.
We can model the transaction and consider the impact of repayments on future cashflow. We can also stress-test the deal in plain English: what happens if revenue drops, if costs rise, or if the seller leaves sooner than expected.
FUNDING SOURCES
Depending on the transaction, the structure may include a combination of funding routes.
Not every structure will be appropriate for every acquisition. The purpose is not to make an unaffordable business appear affordable. It is to establish whether a commercially sensible structure exists.
THE DEAL MAY NOT HAVE TO BE ALL CASH ON DAY ONE
Depending on the transaction, the structure may include a combination of funding routes.
Not every structure will be appropriate for every acquisition. The purpose is not to make an unaffordable business appear affordable. It is to establish whether a commercially sensible structure exists.
UNDERSTAND YOUR BUYING POWER
Before spending months looking for businesses, understand what you can realistically buy.
That gives the search a realistic boundary from the outset.
A REAL ACQUISITION FINANCE EXAMPLE
£500k consideration. £180k on day one. Invoice finance, deferred consideration and asset finance all played different roles.
A 130-year-old manufacturing business with £2.2m turnover and £500k EBITDA was acquired for £500k. The initial £180k was raised through invoice finance against the debtor book. £320k was deferred over three years, payable from future cashflow. Asset finance against unencumbered machinery then helped fund the factory relocation.
The purchase price is only one part of an acquisition. What matters is the total financial commitment after completion.