A business acquisition is one way to grow and scale your business, in which your company purchases another business or its assets and materials. A company can be acquired for many reasons – for example, you may want to acquire a competitor’s assets or customer base, or you may want to take over a competitor and gain a competitive advantage.
The first question you’ll ask yourself when you’re contemplating an acquisition is how you’ll pay for it. Typically, companies don’t have enough cash reserves to complete a buyout, so they need additional funding to do so.
What is acquisition finance?
The term acquisition finance, or M&A financing, refers to the capital raised for the purpose of buying a business, either in full or partially through the purchase of assets and shares. Banks or alternative lenders typically provide this corporate funding in the form of debt finance, which is basically a business loan.
How does business acquisition finance work?
When a company decides to acquire another company, typically after undertaking extensive due diligence and performing a thorough strategic and financial analysis, it will usually look to perform what is known as a leveraged buyout.
An LBO refers to an acquisition financed by borrowing ‘leveraged’ money. Normally, they are secured by the assets and cash flows of the target company and the company that is buying it.
Debt can be a more cost-effective source of capital than equity when financing an acquisition. The reason for this is that, unlike dividends, interest repayments on debt reduce income tax. In addition, debt usually costs less than equity.
ACQUISITION FINANCE
Rates from 4.75%
Borrow £100k – £1.25M
12 – 84 month terms
Suitable for profitable businesses
How we can help
At First Oak Capital Limited, we’re all about helping UK entrepreneurs take their businesses to the next level by acquiring other companies. Our aim is to make the buying process as straightforward as possible. We provide the essential support and financial advice needed for successful business expansions. Whether you’re aiming to grow your business, enter new markets, or secure a competitive edge, we’ve got the knowledge and expertise to help you achieve your ambitions. Our dedicated team is here to guide you through every step, ensuring that your business acquisition journey is a smooth and rewarding experience.
Business acquisitions are a key strategy for growth and expansion. They involve one business taking over another. This can happen in several ways, like buying the majority of a company’s shares. Acquisitions are popular because they offer immediate access to new markets, products, or valuable resources. However, they require careful planning and consideration of financial, legal, and operational aspects.
In the world of business growth, acquiring another company isn’t the only route. Management Buy-Outs (MBOs) and Management Buy-Ins (MBIs) are equally strategic options. In an MBO, a company’s existing management team purchases the business, taking control from the current owners. MBIs, on the other hand, involve an external management team buying into the company, bringing fresh perspectives and strategies.
At First Oak Capital Limited, we help UK entrepreneurs grow their businesses by acquiring others or through MBOs and MBIs. We offer expert advice and financial help to make this process smooth. Our team works with you to find the best strategy for your business growth, ensuring a successful transition and a solid start for your expanded business.
How to Apply
Applying for acquisition finance with First Oak Capital is straightforward. After checking some of the basic qualification criteria below, start by reaching out by giving us a call to discuss. From here we can guide you with what information we will need in order for us to get funding in place for your purchase.
WHY FIRST OAK CAPITAL?
Helping Since 1994
Benefit from our 30 years of experience and expertise in commercial finance brokering
Competitive Industry Rates
Increase business growth and save money with highly competitive industry rates
Access Over 100 Lenders
You can access more than 100 lenders in the UK finance market with our help
Funding Within 48 Hours
Once approved, funding can be provided in as little as 48 hours
Do you qualify for acquisition finance?
While we have close relationships with banks and lenders that can help you take your business to the next level, you will still need to prove that you are experienced and creditworthy enough to obtain the large sums of capital that are often required.
As a guide, you will need to demonstrate that :
- You are buying a profitable business that can afford the repayments of any newly acquired debt
- You currently own a successful business or have a comprehensive CV that shows you are qualified to run the target business
- You are prepared to offer personal or cross-company guarantees
- You currently own commercial or residential property and can produce a positive personal net worth statement
- You can provide a high-level cash flow forecast showing cash generation, before and after acquisition, anticipated changes in costs, debt costs, and net cash flow
- What does the business do?
- Who are their customers?
- What is the history of the business?
- Outline of the infrastructure eg offices, factory, key equipment?
- Staff numbers and are key staff being retained?
- What plans are in place to manage without key staff that are leaving eg the former owner?
- What is the purchase price and how was it arrived at?
- What are the payment terms? Eg is there an element of deferred consideration?
- Why are you buying?
- What experience do you have in the sector?
- Why is the seller selling?
- What due diligence has been or will be done, and who will do it?
- What is the post-acquisition strategy?
- Is there any property involved?
FAQs
Acquisition finance, or M&A financing, refers to funds raised for the purpose of buying a company, either in full or partially through the purchase of assets and shares. Banks or alternative lenders typically provide this corporate funding in the form of debt finance, which is basically a business loan.
Any UK-based business with company directors who are UK residents. The business you are buying will need to be established and profitable, or your current company will need to be. Most lenders will require a personal or cross-company guarantee and the directors will need to be homeowners, even if the property is not required as direct security
It can be used to buy the shares of the target business or the individual assets.
Generally loans start from £100k and can go up to £1.25M
There are several different types of debt finance available to you depending on the amount required and the assets available to secure it against. This could be asset finance, term loans, mortgages, invoice finance or revolving credit facilities.
- Last full years accounts for purchaser and target business
- Up-to-date management information for both
- Last three months bank statements for both
- Individuals – CVs & personal net worth statements
- Copy of the heads of terms agreement
The timeline can vary enormously and could take as little a few weeks.
No, probably not.
Have Questions? Let’s Talk.
Call us today for help securing acquisition finance. In addition, we would be happy to provide you with more information about our services. Call us on 0800 066 3677 or email us to get the ball rolling. Alternatively, if you’d like to get your finance approved today just click on the quote button, complete the short form and we’ll be in touch.
