Acquisition finance
Acquisition finance: funding to buy an existing business
Buying an existing business is rarely funded from one source. Most deals combine the buyer’s own money, borrowing based on the business being bought and, sometimes, the seller agreeing to be paid part of the price later. This page explains how acquisitions are usually structured, what lenders look at and where to get advice.
Wize Finance can help you understand how a purchase might be funded and discuss the finance side with you. We don’t advise on deals, valuations, tax or legal structure, so take advice from an accountant and solicitor before you commit.
Share who is buying, the amount and a little about the business you want to buy. The team reviews your enquiry and discusses the deal with you.
What acquisition finance is
Acquisition finance is funding used to buy a business that’s already trading. It’s used by:
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Companies buying another business: a competitor, a supplier or a business that adds a new location or service
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Management teams buying the business they run: a management buyout (MBO) → Management Buyout Finance
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Individuals and new owners buying a business to run themselves, often through a new company set up for the purchase
Buying shares or buying the business and its assets? If you buy a company’s shares, you take on the company as it is, including its liabilities. If you buy the business and its assets, you agree which assets (and any liabilities) transfer. The choice has legal and tax consequences, so take advice from your accountant and solicitor.
If you buy
a company’s shares the business and its assets
How a deal is usually put together
Most acquisitions are funded in layers. Not every deal uses every layer, and the mix depends on the business, the price, the buyer and the seller.
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Buyer’s contribution
- What it is
- Money the buyer puts into the deal
- Who usually provides it
- The buyer, or the buying company
- What it may depend on
- Lenders usually expect one. How much varies
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Acquisition loan
- What it is
- A loan repaid over an agreed term
- Who usually provides it
- Banks and other lenders
- What it may depend on
- The business’s trading, cash flow and the combined business after the deal
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Asset- or invoice-based funding (optional)
- What it is
- Borrowing against the business’s equipment, property or unpaid invoices
- Who usually provides it
- Asset, property and invoice finance providers
- What it may depend on
- The value and quality of the assets or invoices
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Seller finance (optional)
- What it is
- The seller agrees to be paid part of the price later
- Who usually provides it
- The seller
- What it may depend on
- The seller’s agreement and the deal’s legal terms → Seller/Vendor Finance
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Outside investment (optional)
- What it is
- An investor takes a share to help fund the deal
- Who usually provides it
- Private equity or other investors
- What it may depend on
- The investor’s terms → Equity Finance
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Agree the price. Buyer and seller agree what’s being bought and for how much.
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Structure the funding. Decide the mix of contribution, borrowing and any seller or investor involvement.
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Due diligence and completion. Check the business thoroughly, finalise the legal documents and complete.
The main ways a purchase is funded
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Your own contribution. Lenders commonly expect the buyer to have money at stake in the deal. How much varies by lender and deal.
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An acquisition loan. A term loan to fund part of the price, usually assessed on the business being bought and how the combined business will repay it.
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Secured borrowing. Some acquisition debt is secured on assets of the business being bought or of the buyer. Security and personal guarantees are separate questions, and some lenders may ask for either. → Secured Business Loans
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Borrowing against assets or invoices. Some deals use the business’s equipment, property or unpaid invoices as part of the funding.
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Seller finance. The seller may agree to receive part of the price after completion, sometimes linked to future performance. That needs the seller’s agreement and careful legal drafting. More on this below.
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Outside investors. In larger deals, especially some MBOs, a private equity firm or other investor may take a stake.
Management buyouts and buy-ins
In a management buyout (MBO), the people who already run the business buy it from its owners. In a management buy-in (MBI), an outside management team buys in. MBOs are often funded by the team’s own stake, bank borrowing and the seller agreeing to be paid part of the price later, and sometimes by outside investors.
When the seller helps fund the sale
Sometimes the seller agrees to be paid part of the price over time rather than all at completion. That can bridge a gap between the price and what the buyer can raise, and it keeps the seller invested in the business doing well. It’s an agreement between buyer and seller, not a loan from a finance provider.
Buying an existing franchise business
Buying a franchise unit that’s already trading (a franchise resale) is an acquisition. Lenders usually focus on the unit’s own trading history, the price and how the purchase is structured. The franchisor will usually need to approve the transfer. If you’re buying into a new franchise instead, see Franchise Finance.
- the unit’s own trading history
- the price
- how the purchase is structured
What lenders may look at
Every lender sets its own criteria, but acquisition applications commonly involve:
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The business being bought: its trading history, profitability, cash flow, customers and existing debt
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The price: what’s being bought, how the price was reached and whether it’s shares or assets
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You: your experience, track record, contribution and credit history
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Who runs it afterwards: the management team after completion, and how the handover works
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The structure: the mix of contribution, borrowing and any seller or investor involvement, and how much debt the business would carry
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Security and guarantees: what security is available, and whether personal guarantees are asked for
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Your plans: forecasts for the business after the purchase
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Day-to-day cash: whether the business can still fund its running costs after the deal
Due diligence and advisers
Before you buy, check the business thoroughly. The British Business Bank’s due diligence checklist covers six areas: finances, legal, operational structure, business assets, employees and marketing. Once you buy a business, you can become responsible for its problems, including debt and legal claims.
Most buyers use:
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An accountant to review the business’s financial health
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A solicitor to review contracts, liabilities and the sale documents
Other finance that can sit around a purchase
- Equipment and vehicles in the business: Asset Finance
- Unpaid invoices that could support cash flow: Invoice Finance
- The premises or freehold: Commercial Mortgages
- The business’s existing debts, if they’re replaced at completion: Business Refinancing & Debt Consolidation
- Running costs after completion: Working Capital Loans
- Larger deals: Large Business Loans
Already trading and looking to buy another business?
For new owners, new buying companies and management teams: Funding a purchase through a new company, or as an individual buyer, is usually structured with advisers alongside lenders and, sometimes, the seller. You can still enquire as an individual or management team, or as a new buying company.
If your business is already trading and you’re looking to buy another business, Wize Finance can help you see which types of business finance may suit the purchase.
Related: Business Loans
Acquisition finance FAQs
Can you get a loan to buy a business in the UK?
Yes. Lenders can fund part of the price of an existing business, usually alongside your own contribution. Whether they will depends on the business being bought, the price, your experience and how the deal is structured.
How much of my own money will I need to put in?
It varies by lender and by deal, so there’s no standard figure. Lenders commonly expect buyers to have some money at stake.
What’s the difference between buying shares and buying a business’s assets?
Buying shares means taking on the company as it is, including its liabilities. Buying the business and its assets means agreeing what transfers. The choice has legal and tax consequences, so take advice from your accountant and solicitor.
What is vendor finance?
It’s when the seller agrees to be paid part of the price after completion, sometimes with interest or linked to future performance. It needs the seller’s agreement and careful legal terms.
How is a management buyout usually funded?
Often through a mix of the management team’s own money, bank borrowing, deferred payments to the seller and, in larger deals, outside investors.
Can I use a Start Up Loan to buy a business?
The Start Up Loans programme says you can still be eligible if you’re buying an existing business, subject to its conditions. Start Up Loans are personal loans for business purposes, so check the current terms on the Start Up Loans website.
Will the business I’m buying be used as security?
It may be, depending on the lender. Security and personal guarantees are separate, and some lenders may ask for one or both.
Do I need an accountant or solicitor to buy a business?
It’s strongly recommended. An accountant can check the business’s finances, and a solicitor can check the contracts, liabilities and sale documents.
Planning an acquisition?
Start with the business, the price and your advisers, then look at how the deal could be funded.
You don’t need to know which lender — or even which type of finance — is right before you enquire. Tell us what you’re trying to achieve, and Wize Finance will review your circumstances, discuss the options with you and, where appropriate, connect you with a suitable funding provider.
Last checked 26 October 2026.