Build a complete acquisition budget
The purchase price is one part of the transaction. Stock, professional costs, deposits and working capital during the handover can also require funding. Identify what is included in the sale and what must be arranged separately.
A business with strong past earnings still needs a realistic plan under its new ownership. Changes to staff, lease arrangements or customer relationships can affect future cash flow.
What the funding discussion needs
- The proposed transaction and ownership structure
- Historic financials and evidence supporting earnings
- Purchase agreement information and key conditions
- Your contribution and any proposed security
- Experience relevant to operating the business
Keep due diligence and finance connected
Check that any finance timing matches the purchase conditions. Independent legal and accounting advice can help you understand the transaction, the liabilities being assumed and whether the financial information supports the price.
Avoid committing to an unconditional purchase on the assumption that funding will be available. A preliminary discussion is different from a final credit approval.
What to prepare
- Sale information and proposed purchase price
- Historic financials for the target business
- Your contribution and funding gap
- A transition plan and working capital budget
Common questions
Can the purchase price be funded in full?
That depends on the lender, transaction and applicant. Do not assume a deposit-free arrangement will be available.
Is buying shares the same as buying business assets?
They are different transaction structures with different implications. Get transaction-specific advice and explain the structure to the finance provider.
General information only. Product terms and availability vary. Check the actual proposal and obtain advice appropriate to your circumstances.