Introduction
Acquisition finance is a type of funding used to purchase an existing business. Rather than building a business from scratch, entrepreneurs and investors can acquire an established company with existing customers, revenues, staff and assets.
Acquisition finance allows buyers to complete transactions without providing the full purchase price from their own resources.
At Station Hill Capital, we assist business owners, investors and management teams in structuring acquisition finance solutions through a network of lenders and funding partners.
What Is Acquisition Finance?
Acquisition finance refers to funding specifically arranged to support the purchase of a business.
Funding may be used for:
- Buying a competitor
- Completing a management buyout
- Acquiring a retiring owner’s business
- Expanding into a new market
- Purchasing a strategic supplier
- Acquiring intellectual property or customer contracts
Typical Funding Sources
An acquisition may be funded through:
- Senior debt
- Asset-based lending
- Seller finance
- Deferred consideration
- Invoice finance
- Private investors
- Family offices
- Equity investment
Many successful acquisitions use a combination of funding sources.
Example Structure
Business Purchase Price: £1,000,000
- Buyer Deposit: £150,000
- Bank Debt: £500,000
- Seller Finance: £250,000
- Deferred Consideration: £100,000
Key Considerations
Lenders typically assess:
- Profitability
- Cashflow
- Industry sector
- Management experience
- Assets available as security
Acquisition finance can significantly reduce the amount of capital required to purchase a business while accelerating growth through acquisition.