Uk - Business Acquisition loan

March 12, 2024

by a searcher in Asheville, NC, USA

Would anyone be able to comment on how to finance deal acquisition in the UK? What should be the % of equity for an acquisition? How much would bank/lender are willing to lend? AT what terms ? I heard maturity was maximum 5 years . Can anyone comment on this ?

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Reply by a professional
from Lancaster University in London, UK

Hi Jerome, hate to give the stereotypical lawyer answer but it depends. Does the target business have significant assets? If so, then asset based lending may be available and you could look to obtain circa 65-70% LTV. In the absence of chargeable assets you may be able to obtain circa 2x of cash flow (this is highly dependent on the type of business) but this type of borrowing is often more expensive. The shortfall (for which you will also need to factor in deal costs) will need to be made up from equity or other sources and in any event a lender will want to see that owners have "skin in the game". Maturity of debt is often 5 years but obviously this can be refinanced/extended in due course. Exact terms will vary from lender to lender. Sorry for the lengthy response, happy to have a call if you would like to DM me. I may be able to make some intros that might be useful.

Reply by a searcher
in Essex, UK

Very useful reply here

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