Acquisition Financing for First-Time Buyers: A Practical Blueprint

Posted on: January 24th, 2025

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Acquisition Financing need not be daunting for a first-time buyer despite the strange acronyms the financial jargon used by industry participants. Raising acquisition financing is like any large project where expertise, planning and process is critical. Deploying a practical blueprint to raise acquisition financing is a way to make the process more efficient and faster. Here are 5 practical blue-print steps that will help you successfully raise acquisition financing.

Gain Transaction Knowledge – the process of engaging with a sophisticated acquisition financing lender is hard and you need an expert to navigate that path. They will know what needs to be in place at the proper time so that you can move briskly through the process. An expert will also be able to manage the deal process in a professional manner to ensure the lender develops a positive view of the company.
Gain Market Knowledge – you need an expert to explain the different forms of acquisition financing available and the relevant financial metrics used to qualify for each form. It is different than a basic loan process and involves having a strong growth story and a relatable financial framework for the business. An acquisition financing expert will be able to create a pitch that will directly appeal to the lenders.
Invest in Transaction Support Processes – You need someone to lead the diligence process with the acquisition financing lender who will manage the exchange of information to ensure consistency, high quality and timeliness. This person needs to function as a glue-like interface between the lender, the borrower and other service providers such as accountants, lawyers and consultants.
Run a Robust Distribution Process – you need an acquisition financing expert who has a very large number of acquisition financing lender relationships. The acquisition financing lender market is highly specialized by size, industry and risk so you need an expert to identify the best lending prospects for your specific deal.
Invest in High Quality Financial Statements – Deals fail all too often because the company is weak with financial reporting and cannot provide the supporting detail to the lender’s accounting firm. Before you start your process, assess your financing statement reporting readiness to ensure you are at the required level needed to get through a quality of earnings diligence.

Acquisition Financing is a versatile tool for businesses seeking long term growth. It can be used in a principal way or in a secondary way depending upon the growth profile of the company. Often there is great value to the business to have acquisition financing in its back pocket to use opportunistically. Industry conditions often dictate the most sensible way for a business to grow. During nascent stages of growth, there are typically large levels of demand leading to the need for capacity scaling.

Leveraged buyouts have long been the subject of fascination and condemnation in the US Acquisition Financing market. They came of age in the 1980’s during the junk bond revolution, when virtually any type of business was leveraged with acquisition financing. The junk bond era succeeded in democratizing access to acquisition financing for all companies provided they were large enough.