What is Acquisition Finance? | Meaning & Definition

Acquisition Finance is the use of debt, equity and hybrid financing techniques to achieve an acquisition. The focus of acquisition finance is on identifying the optimal financing solution for a company. This occurs when the cost and flexibility of the financing structure is linked to the company’s cash-flow based value and growth potential.

Acquisition Finance Structures

Optimal acquisition finance structures are adapted to the client situation and may call for nonstandard corporate finance techniques and funding sources.

Financial reporting is usually not a priority for middle market companies, with most deferring investment until it becomes a necessity. Despite the vital role of financial reporting in driving budgetary goals and strategic planning, many private companies see it purely as a cost center disconnected from the value creating function of the company.

Acquisition financing approaches span a wide range of sophistication depending on the expertise level of the buyer. Some buyers see acquisition financing in a simplistic, functional light with little appreciation of the vast differences between loan structures.

Growth capital is the lifeblood of business scale ups, yet many business owners lack an understanding of the basic steps involved in a growth capital raise. Many entrepreneurs overfocus on the vision at the expense of capital formation yet capital access is where the rubber meets the road. The first step in growth capital formation is to clearly define your capital need and to integrate it into a market-based loan structure.

Acquisition Finance

Acquisition Finance Structures

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