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Acquisition financing is the locomotive of M&A deals – without it, all trains on the M&A track grind to a halt. Most companies have insufficient cash or bank lines to fund a big, strategic acquisition.

Acquisition Financing provided by a cash flow lender fuels M&A activity especially for founder-owned companies. These deals are distinct from private equity-led buyouts where ownership is changing hands. Acquisition financing is widely available for businesses that are growing and taking a major strategic acquisition step.

Banks used to be a big force in the acquisition financing market. Many used to provide loans directly to their best customers. Nowadays, most banks participate in acquisition financing indirectly through funding private equity sponsored buy outs. In today’s banking market, a direct loan to a non-sponsored deal is a rarity due to the industry’s conservatism and regulatory oversight.

Cross Border acquisition financing activity has ramped up due to global realignment of supply chains. Grappling with tariffs, companies who export to the US are now investing in the US either through M&A or expansion.

There are a number of ways to solve the funding puzzle at closing in the world of acquisitions. Mezzanine debt has unique properties that give it puzzle funding superpowers compared to other forms of capital. Most deals try to stretch bank financing as far as they can, only for it to come up short due to collateral shortfalls. By the time the bank is done trimming their loan amount, an unfunded gap emerges.