The Building Blocks
Very few acquisitions are funded entirely by the buyer's own cash, and very few are funded entirely by a bank either. Most deals in the £500k to £10m range are stitched together from several sources, each covering a different slice of the price.
- Own cash, usually the smallest slice but the one that proves commitment to lenders and sellers
- Senior bank debt, typically secured against the business and sometimes personal assets
- Asset finance, useful where the target owns plant, vehicles or equipment
- , where the seller agrees to be paid part of the price after
- , tying part of the price to future performance
- Vendor loans and investor equity, either instead of or alongside bank debt
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