When acquiring a business becomes topical, we can offer a variety of options for financing the transaction together with our financing partners. Corporate transaction financing may cover buyers, a target firm and a new company to be established as a result of the transaction.
Bank loan is the most widely used method of financing acquisitions
A bank loan can be raised to finance a company acquisition if the company's post-transaction future prospects are favourable in the hands of new owners. Following the transaction, the borrower repays the loan using the company's cash flow. As the most widely used financing method for corporate transactions, the bank loan can be supplemented, for example, with loans from other financiers or financing from owners. Raising a bank loan may require collateral of the buyer. But then again, collateral and special loan terms and conditions, or financial covenants, enable the buyer to influence the cost of the loan.
When a corporate acquisition involves not only buying the business itself but also related machinery and equipment, the buyer can also make use of asset-based finance. This means that the loan is secured by an asset, such as a production machine.
Suitable financing for every transaction from OP
The size of the corporate acquisition plays a major role in selecting a financing solution. Small transactions are usually financed through the buyer's funds and the bank loan. The bigger the transaction and the more complicated the arrangements for the transaction, there will be a need for several financing methods and financiers. Bigger transactions require diverse expertise and understanding of how corporate transactions affect, for example, taxation and financing and concern for personnel.