Price, transaction costs and trading cash all need a place
A headline purchase price can include equipment, stock or other assets—or leave some of them to be priced separately. Read the sale details before adding costs to the funding budget. A deposit already paid toward the price is part of that price, not another acquisition cost.
Add the cash needed to complete the transaction and operate through the handover. Include professional and finance-cost allowances, any immediate work or replacement equipment, and the cash buffer for wages, suppliers and other commitments before normal receipts settle into place.
Worked acquisition budget: a $250,000 price becomes a $230,000 funding request
This hypothetical sale price is $250,000 and excludes stock. The buyer adds $20,000 for stock, $15,000 for transaction and finance costs, and a $35,000 working-capital buffer. Their total contribution is $90,000. All amounts are scenario inputs; the example does not value a business or establish lender eligibility.
| Budget item | Illustrative amount |
|---|---|
| Agreed business price, excluding stock | $250,000 |
| Stock purchased separately | $20,000 |
| Transaction and finance-cost allowance | $15,000 |
| Working-capital buffer | $35,000 |
| Total cash required | $320,000 |
| Buyer contribution | −$90,000 |
| Funding requirement to investigate | $230,000 |
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If a $30,000 deposit has already been paid from the buyer’s $90,000 contribution, $60,000 of that contribution remains. Do not add the deposit again to the $320,000 total. Replace allowances with actual costs and confirm the treatment of tax and settlement adjustments with the relevant advisers.
The funding request may need more than one structure, depending on what is being purchased and the provider’s assessment. Keep the long-term purchase debt separate from a recurring operating cash gap.
Test what the business earns under your ownership
Historical earnings give you a starting record. Your repayment plan needs to reflect what will continue after the sale. Ask an accountant to help reconcile the figures and distinguish evidence from assumptions.
| Question to examine | Why it matters to the funding plan |
|---|---|
| Which sales and costs recur? | A one-off contract, unusual expense or seller adjustment should not silently become next year’s normal cash. |
| What work does the current owner perform? | Allow for the pay, staffing or time required to replace that work. |
| Will key customers, staff and suppliers remain? | Test the effect of relationships changing during the handover. |
| What happens to the lease and operating permissions? | Confirm the arrangements needed for the business to continue operating. |
| When will the purchased business collect cash? | Receipts may arrive later than wages, supplier payments and new loan instalments. |
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Use the cash remaining after ordinary costs, tax and owner drawings to assess debt commitments for the same period. Keep a weekly transition forecast alongside the annual view; an annual surplus can still hide a settlement or payroll gap.
Explain whether you are buying assets or shares
An asset purchase and a purchase of shares are different transactions. State which is proposed before comparing finance: the buyer, seller, assets or interests acquired, existing obligations and documents will not be identical. Legal and tax consequences require transaction-specific advice.
- Identify the purchasing entity and who will operate the business.
- List the assets, stock, contracts and intellectual property included in the agreement.
- For a share purchase, have advisers review the company being acquired and its existing obligations.
- Confirm how leases, staff, customer agreements and licences are dealt with under the proposed transaction.
- Explain any deferred payment, seller finance or other contribution already contemplated; its terms can affect cash flow and the finance discussion.
Keep the finance milestones beside the sale conditions
| Stage | What to resolve before moving on |
|---|---|
| Initial review | Proposed price, included items, buyer contribution and the funding gap. |
| Due diligence | Financial, operational and legal information checked with the appropriate advisers. |
| Conditional funding discussion | Business evidence, repayment plan, proposed security and outstanding questions. |
| Before an unconditional commitment | The status of finance, purchase conditions, dates and remaining obligations. |
| Settlement and handover | Who pays each amount, when the business can operate and how working cash is retained. |
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An early funding discussion is not final approval. Keep the contract conditions and any finance proposal aligned so the business does not rely on funds that are still subject to assessment.
Prepare the acquisition brief with Atlas
Use Atlas to bring the purchase budget, repayment assumptions and transaction questions into one discussion. The most useful starting brief includes the business being bought, proposed price, your contribution, timing and how you expect the business to service debt.
You can enquire before the transaction is fully documented. Mark what is known and what still depends on due diligence. The finder creates a starting brief; sensitive sale and financial documents belong in an agreed secure process when requested.
What to prepare
- Sale summary, included/excluded items and proposed transaction structure
- Purchase price, cost allowances and working-capital requirement
- Buyer contribution, including any deposit already paid
- Historic financials and support for any earnings adjustments
- A transition forecast including new debt payments
- Relevant experience and intended operating arrangements
- Purchase conditions, key dates and unanswered due-diligence questions
Common questions
Can I get a loan to buy an existing business?
Business acquisition is a funding purpose to discuss. The structure and amount depend on the transaction, your contribution, business evidence, repayment plan and provider criteria. Atlas helps you organise those questions without assuming the purchase will be approved.
How much deposit do I need to buy a business?
There is no universal percentage. Build the full budget, identify your available contribution and separate that from the amount a provider may offer. Cash retained for running the business matters as well as cash paid toward the price.
Can the full purchase price be financed?
Do not assume it can. Eligibility, security, transaction structure and repayment capacity affect a proposal. The full funding requirement can also exceed the price once stock, costs and working capital are included.
Why does working capital matter after the purchase?
Wages, suppliers and other payments may fall due before the new owner receives normal customer cash. A handover forecast helps avoid using the entire cash contribution at settlement and leaving the business short.
Is buying the shares the same as buying the business assets?
No. Identify the transaction structure and ask legal and accounting advisers to explain what transfers and which obligations apply. Give the finance provider the same accurate description.
What financial information should I prepare?
Gather the target business’s financial statements, sales records, receivables/payables and cash-flow information, plus evidence behind any adjustments to earnings. The period and documents required depend on the transaction and provider.
When should I speak with Atlas about acquisition funding?
Start once you can explain the proposed business, price range, contribution and timing. An early discussion helps identify the funding questions to resolve alongside due diligence; it is not final credit approval.
General information only. Product terms and availability vary. Check the actual proposal and obtain advice appropriate to your circumstances.