Finance to buy a business, buy out a partner or acquire a competitor.

Business acquisition finance is a loan to buy an existing business, buy out a partner or acquire a competitor, assessed largely on the target business’s financial history rather than only on yours. Lenders review the last two to three years of the target’s financials, the sale contract and the price, then fund a proportion of the purchase, with the balance coming from your contribution and sometimes vendor finance. Repayments are structured so the acquired business’s cash flow services the debt.

Allow four to eight weeks from application to settlement. The lender reviews the target’s financials and the contract, may require a valuation of the business or its property, and the sale itself often has a due diligence period built in. Starting the finance conversation before you sign the contract, or making the contract subject to finance, avoids pressure on the timeline. Your broker can pre-assess the deal so you know what is fundable before you commit.

Yes, acquisition finance is available, though lenders assess it more closely than a working capital loan. They typically want the target business financials, the sale contract, a handover plan and evidence you have relevant experience. Goodwill on its own is difficult to lend against, so many deals combine a cash deposit, vendor finance and a loan secured by property or the acquired assets. Franchise purchases are often assessed against the franchisor system rather than the individual site.

Lenders in Australia commonly fund 50 to 70 per cent of the purchase price of an established business on an unsecured or goodwill basis, and more where property is offered as security or where the business is in a sector with strong lender appetite such as pharmacies, childcare, accounting practices or franchises with a recognised brand. Buyers are expected to contribute the balance, often 30 to 50 per cent, from savings, equity or vendor finance. Your broker explains what your target and contribution can support.

Lenders look at the target business’s profit and cash flow over the past two to three years, whether the earnings depend on the outgoing owner, the lease on the premises, the price relative to earnings, and your own experience in the industry. They also assess your contribution, your credit history and any security. A business with consistent profits, a long lease and a buyer who has worked in the sector is the strongest case; a declining business or an inflated price is the weakest.

Yes. A partner or shareholder buyout is financed on the same basis as an acquisition: the lender assesses the business’s cash flow and the price being paid for the departing partner’s share. Because you already run the business, lenders view these favourably, and the business itself or its assets often provide the security. A valuation of the business and a formal shareholder or partnership agreement setting out the buyout terms are usually required.

Vendor finance is where the seller agrees to accept part of the price over time instead of all at settlement, usually one to three years with interest. Lenders often like it because it keeps the seller invested in a smooth handover and reduces the amount they need to fund. Most lenders will still expect you to contribute genuine equity, and they will want the vendor loan to rank behind theirs. Your broker structures the bank loan, vendor finance and your contribution so the total works.

Not always, but it helps. Lenders will finance strong businesses partly on goodwill with a director’s guarantee and a general security agreement over the acquired business, especially in sectors they know well. Offering property security increases the amount you can borrow and lowers the rate. For larger acquisitions, a mix is typical: goodwill lending for part, property or equipment security for the rest. Your broker explains what each lender will require for your deal.

In an asset sale you buy the business’s assets, goodwill and contracts and start fresh; in a share sale you buy the company itself, including its history and liabilities. Lenders can finance either, but a share sale usually requires more due diligence because you inherit past obligations, and the security is taken over the company’s shares and assets. Your accountant and lawyer advise on the structure, and your broker aligns the finance to it.

A greenfield site is a brand-new outlet with no trading history, so the lender relies on the franchise network’s average performance and your business plan, and usually funds a smaller share of the cost. A resale is an existing outlet with its own financials, so the lender can assess actual profit and cash flow and will often lend more against it. Resales can also carry a premium for goodwill, which lenders treat cautiously.