Sizing the debt
Senior lenders typically fund two to three-and-a-half times sustainable EBITDA on a trading business with reliable cash generation, and less where earnings are cyclical, customer-concentrated or dependent on the exiting owner. Adjustments to EBITDA must be evidenced, not asserted.
Building the stack
A typical structure combines senior debt, buyer equity of 20% to 40%, and a deferred element — vendor loan notes or earn-out — that keeps the seller engaged through handover. Mezzanine or unitranche fills the gap where senior appetite stops but the deal still services debt.
Asset-backed alternatives
Where the target owns property, plant or a strong debtor book, refinancing those assets at completion can materially reduce the equity cheque, sometimes replacing mezzanine altogether.
What lenders test
Quality of earnings, customer concentration, owner dependency, the retention plan for key staff, and the credibility of your first 100 days. Financial and legal due diligence sits on the critical path — start it early.
Frequently asked questions
How long does acquisition funding take?
Eight to sixteen weeks from heads of terms in most mid-market deals, driven by due diligence and legal documentation rather than credit appetite.
Can I buy a business with no money down?
Rarely, and usually only where the target holds refinanceable assets or the seller accepts a large deferred element. Lenders expect meaningful buyer equity at risk.
Last reviewed: 2026-08-15