Buy a business
Business Acquisition Finance
Acquisition finance is funding to buy an existing business, a competitor, or a partner's share. Deals are usually funded from a mix of your own money, a loan secured on the target business's assets and cash flow, and sometimes a loan from the seller.
Funding Plus works with acquisition lenders to help you structure and fund a purchase, from small owner-managed businesses to management buyouts.
- Funding for buy-ins, buyouts and competitor purchases
- Structured around the target's cash flow
- Combine bank, asset and vendor finance
Reviewed by the Funding Plus team · Last updated October 2026
Step 1 of 3 · Acquisition Finance
How much do you need?
Takes about a minute. No impact on your credit score.
Acquisition Finance at a Glance
- Deal size
- £250k – £25m+
- Terms
- 3 – 7 years
- Your deposit
- Usually 20% – 40%
- Security
- Target's assets and cash flow
- Best for
- Buying a business
Typical figures across the market. Your offers depend on your business, the lender and the security available.
How Acquisition Finance Works
- 1Agree heads of termsPrice and structure agreed in principle with the seller.
- 2Build the funding stackYour money, senior lending, asset-backed finance and any vendor loan.
- 3Due diligenceLenders review the target's accounts, contracts and forecasts.
- 4CompleteFunds are released at completion alongside the legal transfer.
How Much Does Acquisition Finance Cost?
The cost depends on the structure. Senior loans secured on assets and cash flow are the cheapest layer. Unsecured, mezzanine or equity-like funding costs more. Professional fees for due diligence and legal work add to the total.
- Interest on senior and any mezzanine debt
- Arrangement fees
- Due diligence, legal and accountancy fees
- Possible personal guarantees
Worked example
Buying a £1.2m business
- Purchase price
- £1,200,000
- Your deposit (30%)
- £360,000
- Senior acquisition loan
- £600,000
- Vendor loan, repaid over 3 years
- £240,000
- Total funding
- £1,200,000
Illustrative structure only, not a quote. Real deals depend on the target's profits and assets.
Who Can Get Acquisition Finance?
- A target with steady, verifiable profits
- A deposit from your own funds
- Relevant experience in the sector or role
- A credible plan for the business after purchase
- Assets in the target that can support lending
What You'll Need to Apply
- Target's last 3 years of accounts and current management accounts
- Heads of terms and deal structure
- Your CV and financial statement
- Forecasts for the combined or new business
Pros and Cons of Acquisition Finance
Advantages
- Buy an established business with existing customers
- The target's own cash flow helps repay the debt
- Vendor loans can reduce how much you put in
- Faster growth than starting from scratch
Things to watch
- Due diligence costs even if the deal fails
- Personal guarantees are likely
- Over-borrowing can strain the business after purchase
- Complex deals take months
Ways to Fund an Acquisition
Senior cash flow loans
Lending based on the target's profits.
Asset-backed lending
Releasing funds against the target's property, equipment or invoices.
See asset financeVendor finance
The seller accepts part of the price over time.
Management buyouts
Existing managers buy the business they run.
Acquisition Finance vs Other Options
| Option | Best for | Typical speed | Security |
|---|---|---|---|
| Acquisition finance | Buying a business | 1 – 4 months | Target's assets and cash flow |
| Secured business loan | Using property you own | 2 – 6 weeks | Property |
| Commercial mortgage | Buying the premises too | 4 – 12 weeks | The property |
| Government-backed loan | Viable SMEs short of security | 2 – 6 weeks | May be taken |
Who Uses Acquisition Finance?
Acquisitions are common in sectors with steady, contracted income.
Customer story
“[Real customer story for Acquisition Finance: what they needed, how quickly it was arranged and what it let them do.]”
[Name], [Role], [Business name] · [Amount] acquisition finance
Acquisition Finance FAQs
How much deposit do I need to buy a business?
Typically 20% to 40% of the price, depending on the target's profits and assets. Vendor loans can reduce it.
Can I use the target's assets to fund the purchase?
Often yes. Lenders can lend against the target's property, equipment or invoices as part of the deal.
What is a vendor loan?
The seller agrees to receive part of the price after completion, usually over a few years. It shows the seller's confidence in the business.
How long does acquisition finance take?
Usually one to four months, mostly for due diligence and legal work.
Do I need an adviser?
For most deals, yes. A corporate finance adviser and solicitor help with valuation, structure and due diligence.
Related Guides
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