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Acquisition financing loans are specialized loan structures with a decision process that involves multiple variables. As acquisition financing lenders have grown over the years, many have adopted a volume, asset under management approach.

In the deal world, there are two types of acquisition financing transactions – those that limp to the closing line and those that sprint full speed through the tape. While the diligence process will slow all companies down and inflict a bit of fatigue, strong performing companies show resiliency and rebuild momentum heading into their acquisition financing closing.

Acquisition financing functions as a growth elixir for ambitious, fast-growing companies. It enables growth at fundamental levels of a business thereby creating a compounded scale-up effect. This approach allows companies to have superior capital bandwidth which is a competitive advantage in their industries. Through acquisition financing, companies add more enterprise size and diversification in one large growth step which reduces risk and increases value.

Acquisition financing, like any other competitively supplied product, comes in many different quality levels such as high quality, mid and low. There is even a proverbial “lender of last resort”. The focus in qualifying acquisition financing term sheets usually boils down to pricing, yet this exercise often obscures the finer points of discerning the gold standard of acquisition financing when offered.

Leveraged buyouts are change of ownership transaction structures based upon layers of both debt and equity capital. The amount of equity and debt required for a leveraged buyout varies from deal to deal and is non-formulaic. The factors that determine the level of debt and equity required to close a leveraged buyout deal include company type, the price being paid, the Company’s cash flow stability and the buyer’s post-closing game plan.