Acquiring another business, or opening a new location, is a major step, and financing it involves a more thorough look than everyday capital needs.
What underwriting weighs
Acquisition financing typically involves a clear view of the target's cash flow and how the combined operation is expected to perform. The story behind the numbers matters.
Longer horizons
Because acquisitions are significant, longer-term structures are common. That generally means more documentation and a longer process than short-term financing.
Preparing well
Having financials for both businesses organized, and a clear plan for the combined operation, tends to make the process smoother. An underwriter can outline what applies to your situation.
The deal stack
Buyer contribution + Seller note + Financing = Purchase price + Closing costs + Working capitalAdd-backs and true cash flow
Reported net income + Owner compensation adjustments + One-time expenses + Non-cash itemsUnderwriting sizes the transaction from adjusted cash flow, not headline revenue. Add-backs must be documented, not asserted.
| Element | Why it matters |
|---|---|
| Buyer contribution | Signals commitment and reduces financed amount |
| Seller note | Aligns the seller with a successful transition |
| Target cash flow | Determines whether debt service is supportable |
| Working capital at close | The business must operate from day one |
| Transition plan | Continuity of customers, staff, and operations |
- LOI or purchase agreement
- Target financials, ideally three years
- Documented add-backs
- Proof of buyer contribution
- Transition and management plan
Related financing
Have a question about your situation?
Start a financing request and our underwriting team will follow up.