What is acquisition finance?
Acquisition finance is the debt a company or its owners raise to buy another business. It is usually lent against the combined cash flow of the buyer and the target, and often against the target's assets too. Most acquisitions combine two or three layers of funding: senior debt, a working capital facility and, where the price needs it, a vendor loan note or deferred consideration.
The layers of an acquisition structure
Senior term debt forms the core and is repaid over the life of the loan. Stretch senior and unitranche debt lend at higher leverage in a single tranche, up to 5x EBITDA, in place of separate senior and mezzanine loans. Asset based lending sizes a revolving facility on the target's receivables, stock, plant and property, and often releases more than a cash-flow lender alone. A revolving credit facility keeps headroom in place for the enlarged group.
A vendor loan note defers part of the price to the seller and ranks behind the lenders. Structured with the lenders' agreement from the start, it lets the buyer pay a fair price without loading the business with bank debt.
Why use an acquisition finance broker?
Buying a business is a once or twice a decade event for most owners; lenders do it every week. An acquisition finance broker works for the buyer. We set how much debt the deal can carry, design a structure the lenders and the seller can both sign, write the credit paper and run a competitive process, so you are not relying on the first offer from your own bank.
Testing the market across banks, debt funds and specialist lenders usually improves leverage, pricing, covenants or flexibility, and sometimes confirms your bank's offer is the right one. Either way you sign knowing where the market really is, with one team accountable for the funding from first model to drawdown.