How to Finance Buying a Business: Ben Blacker on Acquisition Finance

Buying an existing business, or a competitor, can be one of the quickest ways to grow. You gain customers, staff, systems and cash flow from day one. But funding the purchase is often where the deal gets stuck. Ben Blacker, Managing Director of Blacker Consulting, has helped buyers structure acquisition finance from both sides of the bank’s desk.

“When you buy a business, the lender isn’t just backing you. They’re backing the business you’re buying, and your plan to run it,” says Ben.

How Lenders Look at an Acquisition

Unlike a property loan, much of what you pay for a business is goodwill: the reputation, customer relationships and earning power that don’t show up as hard assets. That makes lenders more careful. They usually focus on:

• The target’s financial history, typically two to three years of financial statements and tax returns
• Whether the cash flow can repay the debt after paying you a reasonable wage
• Your experience in the industry or in running a business of that size
• Your contribution, meaning how much of your own money is going in
• Security, which may include business assets, property or personal guarantees
• The handover plan, including how long the seller will stay on to help

Common Ways to Fund a Purchase

Most acquisitions use a mix of sources rather than a single loan:

• Business term loans from a bank or non bank lender
• Equipment and asset finance for the plant, vehicles or machinery included in the sale
• Vendor finance, where the seller agrees to be paid part of the price over time
• Earn outs, where part of the price depends on the business hitting agreed targets after settlement
• Your own equity, whether savings or a loan secured against other assets

“Vendor finance is underrated. If the seller is willing to leave some money in the business, it tells the bank they believe in it too,” Ben notes.

Mistakes Buyers Make

• Agreeing on a price before talking to a lender about what can actually be funded
• Relying on the seller’s numbers without proper due diligence from an accountant
• Forgetting working capital: you need cash to run the business after settlement, not just to buy it
• Leaving legal, tax and finance advisers out until the last minute

How Blacker Consulting Helps

Ben works with buyers early, before the contract is signed, to test what a lender will fund, structure the deal so it can be repaid comfortably, and bring in the right accountant and lawyer for due diligence. He then helps prepare a clear application that tells the lender the story of the business and the plan for its future.

If you’re looking at buying a business, talk to Ben before you make an offer. It’s the cheapest point to get the structure right.