Supercharge Your SME's Potential with Acquisition Finance

Introducing Acquisition Finance

Before we dive into acquisition finance and how it can help grow your business, let's first define what it is. Simply put, we’re talking about the process of one company purchasing another company or its assets, resulting in a change of ownership and control. The acquiring company obtains the rights to the target company's operations, assets, and liabilities.

That’s how we define it, but importantly, we understand that acquiring another company can be a transformative step towards achieving your growth goals. However, we also know that funding such acquisitions can pose challenges for small and medium-sized enterprises like yours.

That's where we come in. As an alternative lender specialising in supporting SMEs, we offer tailored acquisition finance solutions designed to empower your business. With our expertise and bespoke financing options, we can help you navigate the complexities of acquiring another company, enabling you to unlock new opportunities and drive your business forward.

Contents:

Introducing Acquisition Finance
The benefits of acquisition finance
Understanding your financing options
How we provide acquisition finance
Tailored solutions for SMEs
Our collaborative approach
Expert guidance every step of the way
Case studies
Acquisition finance further reading:
Acquisition finance FAQs
In acquisition finance, what constitutes an acquisition?
How do companies finance acquisitions?
How to finance a business acquisition or acquisition of a business
How to finance a new business acquisition in the uk
how to fund or finance an acquisition
How to get a business acquisition loan
What is a business acquisition loan?
What is leveraged acquisition finance?
What are the risks associated with acquisition finance?

The Benefits of Acquisition Finance

From an SME business owner's perspective, acquiring a business can offer several benefits:

Accelerated Growth: Acquiring a business provides an opportunity for accelerated growth compared to organic expansion. Instead of investing years in building a new customer base, developing products, or entering new markets, acquiring a business allows for immediate access to an existing customer base, established brand recognition, and operational infrastructure.
Time Efficiency: Acquiring a business with the help of acquisition finance can expedite the growth process significantly. Rather than spending years building the business organically, acquisition finance enables SMEs to complete the acquisition within months, instantly expanding their market presence and capabilities.
Supercharging Growth: By acquiring a business, SMEs can leverage synergies between the acquiring and target companies. This synergy can lead to enhanced operational efficiency, cost savings, cross-selling opportunities, and access to complementary products or services. It allows SMEs to supercharge their growth potential by leveraging the existing strengths and resources of the acquired company.
Access to Expertise: Acquiring a business often means gaining access to experienced employees, management teams, or industry experts who can bring valuable knowledge and insights to the acquiring company. This expertise can accelerate growth, drive innovation, and improve overall business performance.

Taking on debt capital to fund a business purchase or acquisition offers several advantages:

Preserving Equity: By using debt capital to fund a business purchase, SME owners can preserve their equity stake in the company. Instead of diluting ownership by seeking additional equity investors, debt financing allows them to maintain control and ownership while still accessing the necessary funds for the acquisition.
Tax Benefits: Interest payments on debt are often tax-deductible, reducing the overall tax liability for the acquiring company. This can help improve cash flow and make debt financing a more cost-effective option compared to equity financing.
Flexibility: Debt financing offers flexibility in terms of repayment options and structures. SMEs can negotiate repayment schedules and terms that align with their cash flow projections, allowing for more manageable debt servicing.
Potential for Higher Returns: When used strategically, debt financing for acquisitions can generate higher returns for SMEs. By acquiring a business with growth potential or synergistic advantages, the increased revenues, market share, and cost savings resulting from the acquisition can outweigh the costs associated with the debt financing.

Acquiring a business through debt financing provides SMEs with the opportunity to achieve rapid growth, access valuable expertise, and preserve ownership while leveraging the benefits of existing business assets and future cash flows.

Understanding Your Financing Options

When it comes to acquisition finance, navigating the various financing options can be overwhelming. We simplify the process for you by offering clear and straightforward financing solutions:

Our debt financing options are designed to suit the unique needs of SMEs. We provide flexible repayment terms, competitive interest rates, and loan structures that align with your business's cash flow and growth potential.

How we provide acquisition finance

At SME Capital, we know all businesses are not the same. So we provide bespoke, long term acquisition finance solutions to UK businesses not one-size-fits all blanket loans.
We exist because we truly believe we provide a better alternative with our custom-made funding solutions for UK businesses to help you grow and succeed.

It’s in our DNA.

We are experts in SME lending, so whatever the loan purpose, our goal is to become your long term funding partner, which is why each bespoke loan will be specially-designed for you.

We provide the best acquisition finance solution for you, without you giving away control or equity.

We understand the importance of trusted relationships and have dedicated regional directors based across the UK who will take the time to understand your business, your unique needs specific to you and support you with your business loan application. We enhance our traditional underwriting with data analytics, including timely risk and trend analysis to put you in control of your future.

By breaking down silos typically found in traditional lending organisations, we give you direct access to decision makers, enabling funding in 6–8 weeks.

Get in touch now to discuss funding options

Tailored solutions for SMEs

We understand that SMEs have unique financial circumstances and requirements. Our acquisition finance solutions are specifically tailored to meet the needs of small and medium-sized enterprises:

Fast and Efficient Process: As an alternative lender, we have a streamlined approval process designed to provide you with a quick response. We recognise the importance of agility in seizing acquisition opportunities, ensuring minimal delays.

Flexible Financing Structures: We work closely with you to create financing structures that align with your business goals and financial capabilities. Our solutions can include a combination of debt and equity financing tailored to your specific acquisition.

Considerate Risk Assessment: Unlike traditional lenders, we take a comprehensive view of your business potential beyond just historical financials. Our risk assessment considers your growth prospects, industry position, and the strategic merits of the acquisition, enabling us to provide financing options that suit your business.

Our collaborative approach

At SME Capital, we believe in fostering strong partnerships with our clients. When it comes to acquisition finance, our collaborative approach sets us apart:

Personalised Support: We assign a dedicated team to work closely with you throughout the acquisition finance process. Our experienced professionals provide personalised support, ensuring a deep understanding of your business goals and tailoring our solutions accordingly.

Due Diligence Assistance: We assist you in conducting thorough due diligence on the target company. Our expertise helps you assess financial performance, market position, growth potential, and potential risks, providing valuable insights to inform your acquisition decision.

Access to Network: Our extensive network includes experts in mergers and acquisitions, legal advisors, and industry specialists. We leverage these connections to provide you with holistic guidance and facilitate a smooth acquisition process.

Case Studies

Acquisition furthering engineering business intelligence (smecapital.com)

Acquisition finance further reading:

Acquisition Finance FAQs

In acquisition finance, what constitutes an acquisition?

In acquisition finance, an acquisition refers to the process of one company purchasing another company or its assets, resulting in a change of ownership and control. The acquiring company obtains the rights to the target company's operations, assets, and liabilities.

How do companies finance acquisitions?

Companies finance acquisitions through a combination of equity and debt. Equity financing involves using the company's own funds or raising capital from investors in exchange for ownership shares. Debt financing involves borrowing funds from lenders, such as banks or bondholders, which must be repaid over time with interest. The mix of equity and debt financing depends on factors like the company's financial health, creditworthiness, and the size of the acquisition.

How to finance a business acquisition or acquisition of a business

Financing a business acquisition can be achieved through various methods. These include utilising internal funds or retained earnings, seeking external investors or venture capital, obtaining loans from banks or financial institutions, exploring mezzanine financing or seller financing options, or utilising government-backed loan programs designed to support acquisitions.

How to finance a new business acquisition in the UK?

Financing a new business acquisition in the UK can involve similar methods as mentioned above. Additionally, SMEs in the UK may also leverage government support schemes and grants specifically tailored for business acquisitions. These initiatives aim to provide financial assistance, favourable loan terms, or tax incentives to promote growth and encourage entrepreneurial activity.

How can I fund or finance an acquisition?

Funding or financing an acquisition can be accomplished through a combination of debt and equity sources. It involves securing the necessary capital from lenders, investors, or a combination thereof to complete the acquisition. The specific funding approach depends on factors such as the size of the acquisition, the financial strength of the acquiring company, the target company's value, and the risk profile of the transaction.

How can I get a business acquisition loan?

To obtain a business acquisition loan, companies typically need to approach banks, financial institutions, or specialised lenders that offer such loans. The loan application process involves providing detailed financial information, business plans, and documentation related to the acquisition. Lenders evaluate the creditworthiness of the acquiring company, the viability of the acquisition, and the potential for repayment before approving the loan.

What is leveraged acquisition finance?

Leveraged acquisition finance, also known as leveraged buyout (LBO) finance, refers to the use of a significant amount of borrowed funds (debt) to finance an acquisition. In leveraged acquisition finance, the acquiring company or private equity firm relies heavily on debt financing, with the acquired company's assets or cash flows serving as collateral for the borrowed funds. This strategy allows the acquiring company to amplify its purchasing power and acquire a larger business than it could with its own available funds. Leveraged acquisition finance offers potential benefits such as preserving equity, tax advantages, and the ability to achieve higher returns. However, it also comes with increased financial risk due to the reliance on borrowed funds and the need to meet debt repayment obligations. Careful assessment of the acquisition's financial viability and the ability to generate sufficient cash flow is essential in leveraged acquisition finance.

SME Capital do not provide leveraged acquisition finance.

What are the risks associated with acquisition finance?

Just like any type of funding, there are risks involved with growth capital. SMEs should be aware of these risks and take steps to mitigate them.

If you would like to discuss acquisition financing in more detail or our wider funding capabilities do get in touch.

About SME Capital

SME Capital was founded to support the growing number of SMEs who face difficulty or frustration in accessing capital through traditional methods. We understand the importance of real and trusted relationships in the SME lending market and have dedicated Regional Directors based across the UK. By combining traditional lending expertise with the latest in data analytics, we are supporting established UK SMEs with their long-term objectives and business ambitions.

Fuelling Ambitious Growth: Supercharge Your SME's Potential with Acquisition Finance