Finance the business after the transaction
Mergers and acquisition financing can help fund the purchase of an operating business, selected business assets, or an ownership interest. The request should explain exactly what is being acquired, which entity will borrow, and how the continuing business will support the proposed payments. This page concerns business transaction financing, not securities recommendations or investment advice.
Pearl Financing connects businesses nationwide with lending partners and is not a direct lender. Availability, transaction eligibility, structure, costs, and timing vary by provider. Describing acquisition finance does not mean a target business, valuation, or purchase arrangement has been reviewed or approved.
Separate purchase price from total cash needed
The seller’s asking price is only part of the budget. Identify professional fees, transaction expenses, inventory adjustments, required repairs, and the working capital needed after closing. Explain whether the seller retains any interest, provides transition services, or proposes to finance part of the purchase.
Ask your advisers to distinguish an asset purchase from an ownership-interest purchase and identify the consequences for liabilities, contracts, employees, licenses, and taxes. The SBA’s business acquisition guidance emphasizes evaluating an existing business before deciding to buy it. Financing does not replace that investigation.
Check the earnings you are relying on
Reconcile the seller’s financial statements with supporting records and explain adjustments to earnings. Separate recurring performance from temporary gains, owner-specific expenses, and projected improvements. Test whether the business could support payments without all planned growth or cost savings occurring immediately.
Customer concentration, expiring contracts, dependence on the seller, and key employee departures can change the post-closing picture. Build a transition plan that names the people responsible for sales, operations, supplier relationships, and financial controls.
Prepare the transaction package
Organize:
- A letter of intent or proposed purchase terms and the current transaction stage.
- Financial information for the target and any existing acquiring business.
- A sources-and-uses schedule covering purchase, expenses, and operating reserves.
- Ownership details, buyer experience, and available equity contributions.
- Existing liens, proposed seller financing, and any contingent purchase payments.
- A repayment forecast with a downside case and transition costs included.
Use a verified process to exchange confidential deal documents. Confirm who is permitted to share target-company records.
Compare the actual structure
Request the payment schedule, net proceeds, maturity, guarantees, collateral, reporting requirements, and conditions before closing. SBA’s 7(a) program overview lists certain ownership changes among permitted uses, subject to the applicable requirements. Do not assume a government guarantee removes the buyer’s repayment obligations or guarantees business performance.
Discuss your acquisition funding need with the transaction type, location, stage, and proposed ownership structure.