Acquisition Funding

M&A financing refers to the process by which companies secure funds for their mergers and acquisitions. This is typically necessary as most M&A deals require substantial amounts of capital that may not be readily available from the acquiring company or individual’s own cash reserves. Hence, it is important to understand the various methods of financing an M&A deal, depending on the buyer's financial position and the stage of the businesses involved.

At Finance Factory, we assist many companies in organizing their M&A process and provide guidance on how to finance a business acquisition. Acquisitions are generally funded through a combination of debt and equity, which can be obtained from third-party sources such as banks, private equity, or private debt investors, as well as through the buyer's own equity or a line of credit.

Choosing the appropriate financing method for an M&A deal requires careful consideration of several factors, including the prevailing interest rates, the buyer's financial position, and the target company's willingness to accept equity as part of the deal.

Debt and equity financing are the two most commonly used methods of M&A financing. Debt financing involves securing third-party debt to fund the acquisition, while equity financing involves using the buyer's own equity to pay for the deal. The implications of each method are different and should be weighed carefully.