Acquisition Finance

Acquisition Finance for UK Businesses

Acquiring another business, whether that's a competitor, a supplier, or a company in a completely new sector, can be one of the fastest ways to grow. Acquisition finance from MAF Finance Group helps UK businesses fund the purchase of another company, without needing the full purchase price from cash reserves alone.

Most acquisitions are funded using a combination of finance types rather than a single loan, and we work with a wide panel of banks and alternative funders to structure a solution that fits your deal, your business, and your cash flow.

What is Acquisition Finance?

Acquisition finance is the funding used to buy an existing business, whether that's the whole company, a controlling stake, or specific assets and trade. It can be used for a straightforward trade purchase, a management buy-out (MBO), a management buy-in (MBI), or to acquire a competitor as part of a wider growth strategy.

Rather than being a single product, acquisition finance is usually made up of several elements working together, such as a secured loan, asset-based lending, and an element of deferred consideration from the seller. The exact structure depends on the size of the deal, the financial strength of the business being acquired, and how much you're able to contribute yourself.

Most funders will want to see a strong trading history and stable cash flow in the target business, as well as a clear rationale for the purchase before agreeing. Read more about unsecured business loans and secured business loans, both of which can form part of an acquisition funding structure.

How does Acquisition Finance work?

Acquisition finance works by matching the funding structure to the deal in front of you, rather than applying a one-size-fits-all loan. We start by understanding the target business, the purchase price, and how much you're able to put in yourself, before approaching lenders on your behalf.

As a general guide, most funders will want to see:

• At least 12 months' trading history in the target business
• A clear business plan explaining the rationale for the acquisition
• Recent accounts and management information for the target company
• An indication of how much of the purchase price you can fund personally
• Details of any assets within the target business that could support borrowing

The process typically works as follows:

Step 1: You contact us with the deal details. We discuss the target business, the purchase price, how much you can contribute, and your reasons for the acquisition.

Step 2: We approach our lender panel on your behalf and structure a funding solution using the appropriate mix of products. Know Your Customer (KYC) and due diligence checks will be carried out at this stage.

Step 3: You receive terms and complete the deal. Once you're happy with the structure, you sign the finance document, and funds are released in line with the completion timetable agreed with the seller.

What are the benefits of Acquisition Finance?

• Grow your business without needing the full cash purchase price upfront
• Preserve working capital
• Funding can be structured around the target business's own cash flow
• Access to a wide range of finance products
• Suitable for trade purchases, management buy-outs and management buy-ins
• Deferred consideration from the seller can reduce the amount you need to borrow
• Flexible repayment terms to match affordability
• Support from initial application through to deal completion

How we helped a packaging manufacturer acquire a competitor

A specialist packaging manufacturer approached MAF Finance Group looking to acquire a smaller regional competitor, with the aim of expanding its customer base and taking on a second production site.

The agreed purchase price was £1.2 million. The client was able to contribute £300,000 from existing reserves, with the seller agreeing to defer a further £200,000 over two years.

MAF Finance Group arranged the remaining £700,000 through a secured loan, using property and machinery within the target business to support the borrowing. The facility was structured over a seven-year term to align with the combined business's projected cash flow.

The acquisition was completed on schedule, and the client has since integrated the second site into its operations, increasing production capacity and strengthening its position in the regional market.

What finance options are available for Acquisition Finance?

Secured loans: Using assets or property to secure a larger portion of the purchase price. This route typically supports larger funding amounts.

Asset-based lending: Borrowing secured against assets already held within the target business, such as plant, machinery, or property, freeing up funding without requiring additional personal security.

Unsecured business loans: For smaller acquisitions or to top up other funding, an unsecured business loan can fund all or part of a purchase price without offering assets as security.

Asset refinance: Refinancing assets already owned by your business can release capital that contributes towards the purchase price, without needing to sell the assets involved.

Invoice finance: Releasing funds tied up in outstanding invoices can support working capital during and after the acquisition process, helping to bridge any short-term cash flow gaps.

Deferred consideration: Agreeing with the seller to pay part of the purchase price over time can reduce how much needs to be borrowed upfront and ease the pressure on day-one cash flow.

Apply for Acquisition Finance

We work with a wide panel of banks and alternative funders and can structure a funding solution around your specific acquisition.

If you would like to get a quote or need further information, simply fill in the form and we will contact you. If you want to speak to someone directly, you can call us on 0115 958 6872 and a member of our team will be happy to speak to you. Alternatively, email us at [email protected].