Acquisition Finance

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Acquisition Finance

Acquisition finance is one of the more difficult financing facilities to put in place though CreditSME has extensive experience in this area that can be used to get the optimal loan terms with an efficient and seamless loan approval process.

There are various types of loan facilities that can be used for acquisition. The most common facility used is a simple term loan though other facilities can be used including equipment finance, debtor finance and most structured solutions comprising a subordinated debt facility.

CreditSME has extensive experience with acquisitions and acqusition finance and access to a wide range of lenders that can provide the right financing solution for your business. Enquire below or contact us today to find out what funding solution is right for your business acquisition.   

Key considerations

The below outlines some of the key considerations when seeking acquisition finance.

Level of equity

The key consideration when devising the most appropriate funding structure for acquisition finance is the level of "equity" required in the transaction. The level of equity is what the lenders see as providing support for the loan facility that they provide. This equity may come as straight cash (ie. cash paid towards the acquisition price) or other forms of equity such as the valuation of an existing business or other tangible assets. The level of equity required will vary based on the quality of earnings of the business (both quantum and predictability/volatility of earnings), industry segment and amount of experience of the management team.

For an existing business that is purchasing another business, acquisition finance can often be used to fund 100% of the purchase price by leveraging the valuation of the existing business. For a stand-alone acqusition (ie. not being purchased by an existing business), there will typically a lender requirement for an equity component of at least 30% of the purchase price (ie. lender funds 70% of the purchase price) though will often be closer to 50%.

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