Acquisition finance for UK companies, management teams and sponsors.

More than the headline price. Every funded acquisition rests on a sources and uses table, the one page that reconciles what the deal costs against every pound paying for it. On the uses side sit the consideration for the shares, the repayment of the target's existing bank and asset finance debt, the working capital the combined business needs from day one, arrangement and commitment fees, and the legal, financial and commercial due diligence bills. On the sources side sit senior debt, any junior layer, cash retained in the target, vendor loan notes, deferred consideration and the equity you and any co-investor are putting in.

Deals fail at this table more often than they fail at credit. Buyers routinely fund the price and forget the £400,000 of working capital the business swallows in the first quarter, or the invoice discounting facility that becomes repayable the moment control changes. We build the table before we approach a funder, because the size of the funding requirement, not the size of the price, is what the credit paper is written against.

Compare every route in the guide to how to finance a business acquisition.

Six, layered by rank and price. Senior debt ranks first, takes full security and amortises over four to six years. Cash flow lending does the same job for asset-light businesses where there is nothing but earnings to lend against. Unitranche debt collapses senior and junior into one facility from a single debt fund, one margin, one covenant set, principal repaid in a bullet at maturity. Mezzanine finance sits behind the senior lender with cash interest, payment in kind interest and sometimes warrants. Asset based lending advances against the target's debtors, stock, plant and property, which often releases more than a cash flow multiple would.

Two sources sit outside the banking market and cost nothing in margin. Vendor loan notes leave part of the price with the seller, repayable over two to three years, and are the single most useful lever in a small deal. At the plain end of the market, ordinary business loans and commercial mortgages do the same job for smaller businesses where the price is modest and the security is bricks. Sponsor and management equity completes the structure, typically alongside a private equity investor at 30% to 50% of enterprise value from sponsor and management. Most structures we arrange for trading businesses combine three of these, not one.

Price follows rank, and acquisition financing is dearer than the business loans a company takes out for ordinary trading. Our indicative all-in ranges as at September 2026 are 7% to 10% all-in for bank senior debt, 9% to 14% all-in for specialist cash flow lending, 10% to 13% all-in for unitranche, 12% to 18% including PIK for mezzanine, and 6% to 10% plus facility fees for asset based lending. Facilities are quoted as a margin over the Bank of England Bank Rate or over SONIA, so the all-in cost moves with the reference rate rather than sitting still. These are bands we see in the market, not quotes, and they are indicative only.

Then read the fees, because they change the answer. Arrangement fees of 1 to 2% of the facility, non-utilisation fees on the undrawn revolver, exit or prepayment fees on fund debt, and monitoring fees on asset based lines all sit outside the margin. A unitranche facility with no amortisation frequently beats a cheaper bank package on cash cost in the first three years, because the bank is taking capital back while the fund is not. We model total cash cost across the hold period alongside the blended cost of the whole structure, and we tell you which lever moved the number.

Expect a full debenture over the acquiring entity and the target, a legal charge over any property, a share pledge over the target's shares, cross guarantees between group companies and an intercreditor deed ranking each layer. Personal guarantees are common on smaller bank deals and unusual on sponsor-backed leveraged structures, where lenders take comfort from equity subordination and warranties instead. Where a newco is formed to make the purchase, security is taken at both levels so the lender reaches the trading assets rather than a holding company shell. Corporate groups with several trading businesses should expect security across the whole structure, not only over the entity making the purchase.

Diligence runs in three streams. Financial due diligence tests the quality of earnings, reads the statutory accounts against the management accounts, normalises the adjustments and separates real profit from add-backs. Commercial diligence examines the customer base, the pipeline and the market. Legal diligence checks title, contracts, employment and litigation, and feeds the warranties and indemnities in the share purchase agreement. On acquisitions of this size, funders expect the financial information pack to be ready before diligence starts, not assembled during it. On a lower mid-market deal, plan for six to ten weeks from credit approval to completion, with the facility agreement, intercreditor deed and share purchase agreement negotiated in parallel rather than in sequence.

In three places. Interest on debt taken out for a genuine commercial purpose is generally deductible against corporation tax, which at the 25% main rate is what makes leverage efficient; the small profits rate of 19% applies below £50,000 of profit with marginal relief up to £250,000. That deduction is not unlimited. The corporate interest restriction can cap relief where a group's net interest expense exceeds £2 million a year, which matters on larger structures and on mezzanine coupons that look modest until payment in kind interest compounds.

Stamp duty is the second. A share purchase attracts stamp duty at 0.5% of the consideration, payable by the buyer, while an asset purchase can attract stamp duty land tax on any property and VAT questions on the trade. Third, where the debt sits: interest is only useful if it arises in the entity with the taxable profits, so newco, holdco and the trading company have to be arranged so the deduction lands somewhere it can be used, and group relief works. Group structures holding several businesses are worth modelling once, properly, so the financial and tax outcomes are seen together. We structure the debt with your accountant and tax adviser rather than instead of them. We do not give tax or legal advice.

Speed, mostly. Organic business growth compounds slowly, while an acquisition delivers revenue, customers, staff and capability on the day of completion. For corporate acquirers the benefits are concrete: a step change in scale that spreads fixed overheads across more turnover, purchasing power with suppliers, entry to a region or a sector that would take years to build from nothing, and a wider product set to sell into an existing customer base. Financing the purchase with debt rather than with cash keeps working capital inside both businesses, and because interest on commercial borrowing is deductible against corporation tax, part of the cost is met by the tax bill you no longer pay.

The benefits are real and so is the cost. Debt converts a variable profit stream into fixed monthly payments, and mergers and acquisitions have a long record of destroying value where integration is underestimated. Two profitable businesses combined badly earn less than either did alone. So the honest version of the benefits case pairs each one with the financial risk behind it: leverage magnifies gains and losses equally, covenants hand control to the lender after a single bad quarter, and a business bought at a full multiple leaves no room for a disappointing first year. Where the price outruns what the business can service, equity financing stops being a choice and becomes the only way to close the gap. We size acquisition financing against the downside case in the accounts, then show you the upside, rather than the other way round.