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The distressed company buyer tends to be overconfident as to their plan and underprepared as to their acquisition financing. There are many hidden costs within a distressed company that need capital which adds to the purchase price.

Understanding the cost of acquisition financing leads to misguided comparisons and ill-informed views. Deal world participants are so focused on the nominal cost of interest; they end up comparing apples to oranges.

Niche industries are everywhere and present a conundrum for acquisition financing providers. Each lender has their own set deal criteria that governs the types of acquisition financing deals they can do.

Roll up strategies need copious levels of acquisition financing, yet capital requirements do not end there.   Rapidly scaling companies create capital needs far beyond the purchase price in the form of integration costs, transaction costs, working capital and growth investment.

First time users of acquisition financing often wade into the deep end with little focus on debt capacity. Debt capacity analysis is the foundation of all M&A and acquisition financing structures. There are several important principles of debt capacity that underpin how a smart acquisition financing provider will view your deal.