Business Acquisition Financing
A practical guide to financing the purchase of an established business, partner interest, or business-and-real-estate transaction.
Business acquisition financing is underwritten around both the buyer and the business being purchased. Lenders typically evaluate the target company's historical cash flow, purchase price, valuation, industry, buyer experience, equity injection, seller involvement, collateral, and whether the post-close business can support the proposed debt.
The capital stack can include SBA financing, seller financing, buyer equity, and other supplemental sources depending on the transaction.
Common use cases
- Acquire an established operating company
- Purchase a franchise or route-based business
- Buy out an exiting partner
- Acquire a business together with owner-occupied real estate
- Finance eligible transition and closing needs as part of a broader acquisition
How lenders look at it
What typically drives the financing decision
Target cash flow
Historical tax returns, interim results, add-backs, existing debt, and the business's ability to service acquisition debt.
Purchase price
Valuation support, allocation of purchase price, goodwill, equipment, inventory, and real estate where applicable.
Buyer profile
Credit, liquidity, industry/management experience, resume, and ability to operate the acquired company.
Equity and seller structure
Buyer injection, seller note, standby/subordination, and post-close leverage can affect the transaction.
Transition risk
Seller involvement, customer concentration, key employees, licenses, and continuity of operations.
Preparing your request
What to have ready
Requirements vary by program, but a complete and organized package helps FLS identify the right path and reduces unnecessary back-and-forth.
Target business
Business tax returns, YTD P&L and balance sheet, debt schedule, purchase agreement/LOI, and supporting operational information.
Buyer
Personal tax returns, personal financial statement, resume, liquidity verification, ownership information, and credit authorization.
Transaction
Sources and uses, equity injection, seller financing terms, business valuation, and real-estate information if included.
Process
From request to funding
- 1
Review the target
Review the target business and preliminary purchase structure.
- 2
Analyze cash flow
Analyze historical cash flow and expected post-close debt service.
- 3
Review the buyer
Review buyer experience, credit, liquidity, and equity contribution.
- 4
Structure the deal
Structure SBA/other acquisition financing and submit a complete package.
- 5
Underwrite & close
Complete lender underwriting, valuation, closing diligence, and funding if approved.
What can strengthen the request?
Strong historical cash flow, a supportable purchase price, experienced buyer, adequate equity/liquidity, seller cooperation, and a thoughtful transition plan can materially improve financeability.
Find the right business acquisition financing path
FLS Capital Advisors works across multiple financing sources rather than forcing every request into one program. Answer a few questions about your business and financing objective, and a specialist will review the paths that may fit.
General information only. This guide is intended for educational purposes and does not constitute an approval, commitment to lend, or guarantee of financing. Programs, eligibility, rates, fees, terms, collateral requirements, and documentation requirements vary by funding source and may change. Final eligibility and terms are determined by the applicable funding source after review of a complete application.