Acquisition financing guide
Plan the financing before signing the deal
A sound acquisition structure accounts for purchase price, existing obligations, closing costs, and the liquidity the combined business needs after closing.
Sources and uses
Define the full capital requirement
The financing request should reflect the entire closing and the liquidity needed to operate afterward.
01
Uses
Purchase consideration, debt payoffs, transaction expenses, required capital expenditures, and post-close working capital.
02
Sources
Buyer equity, senior debt, revolving availability, seller financing, and other transaction capital when appropriate.
The combined business
Underwrite cash flow after the transaction
A structure must support the acquired business after ownership changes and integration begins.
- Normalize historical earnings and identify one-time items.
- Account for capital expenditures and working capital needs.
- Treat projected synergies conservatively until supportable.
- Measure debt service against realistic post-close cash flow and liquidity.
Common financing layers
Build the stack around the transaction
The sources of capital should work together and leave the combined company with room to operate.
Senior term financing
A defined amount used toward the purchase and other long-term transaction uses.
Revolving availability
Post-close liquidity for working capital, seasonality, and integration.
Asset-supported financing
Receivables, inventory, equipment, or real estate may support part of the structure.
Seller and buyer capital
Seller notes, rollover equity, or additional buyer equity may complete sources and uses.
Path to closing
Move from initial sizing to documentation
The transaction and the operating company need to be evaluated together from the first review through funding.
Initial review
Evaluate the target, buyer, sources and uses, requested structure, and timing.
Diligence and underwriting
Validate earnings, obligations, collateral, risks, and post-close debt-service capacity.
Documentation and closing
Finalize approvals, definitive documents, payoff requirements, and funding conditions.
Transaction partners
Financing paths for buyers and sponsors
Acquisition structures should reflect the buyer’s role, equity plan, operating experience, and post-close objectives.
Independent Sponsors
Capital structures built around a defined acquisition and operating plan.
Search Funds
Financing considerations for entrepreneur-led acquisitions and post-close operations.
Capital Partners
Coordinate around the transaction, diligence, timing, and the proposed capital stack.
Bring the acquisition and financing plan together
Share the target, sources and uses, buyer background, and timing. We will review the opportunity and identify the next step.
Financing is subject to application, underwriting, approval, eligibility requirements, and final documentation.