Acquiring another business can be one of the fastest and most effective ways to accelerate growth.
Whether it’s expanding into new markets, increasing production capacity, acquiring a competitor, or strengthening customer reach, acquisitions can create significant opportunities for ambitious businesses.
However, funding an acquisition is rarely straightforward.
In today’s market, rising interest rates, tighter cashflow, and more complex deal structures mean many businesses require flexible funding solutions to complete transactions successfully.
At BFS, we work with businesses looking to fund acquisitions at every stage — from raising capital for the initial purchase through to supporting deferred consideration payments after completion.
What is Acquisition Finance?
Acquisition finance refers to funding used to purchase another business, company assets, or shares.
The funding can be structured in several ways depending on:
- The size of the acquisition
- The buyer’s existing financial position
- The target company’s assets and cashflow
- The overall deal structure
- Any deferred payments involved
Acquisition funding is no longer limited to large corporates. SMEs and growing businesses are increasingly using specialist finance solutions to support mergers, management buyouts, and strategic acquisitions.
Funding the Initial Purchase
One of the biggest challenges buyers face is raising enough capital to complete the acquisition itself.
Many businesses do not want to use all of their existing cash reserves, particularly when working capital will still be required after the deal completes.
This is where structured funding solutions can help.
Depending on the circumstances, acquisition funding can include:
- Commercial loans
- Growth Guarantee Scheme (GGS) facilities
- Asset-based lending
- Invoice finance
- Bridging loans
- Asset finance
The right structure will often involve a combination of funding products designed to support both the acquisition and the ongoing operation of the business.
Using Invoice Finance to Support Acquisitions
Invoice finance is becoming an increasingly popular tool within acquisition funding structures.
Rather than waiting 30, 60, or 90 days for customers to pay invoices, businesses can unlock cash tied up in receivables immediately.
This can provide substantial working capital from day one following an acquisition.
For acquisitive businesses, invoice finance can help:
- Raise capital towards the purchase price
- Improve post-acquisition cashflow
- Support integration costs
- Reduce pressure on existing reserves
- Fund growth following completion
In many cases, lenders are willing to assess the strength of the debtor book alongside the overall acquisition strategy.
Funding Deferred Consideration
Many acquisition deals now involve deferred consideration.
This means part of the purchase price is paid upfront, with the remaining balance paid later over an agreed period.
Deferred consideration is increasingly common because it helps:
- Reduce upfront capital requirements
- Spread risk between buyer and seller
- Improve affordability
- Support smoother transitions
However, businesses still need a strategy to fund those future payments when they fall due.
At BFS, we regularly help businesses structure funding for deferred consideration through:
- Refinancing existing facilities
- Invoice finance growth
- Term loans
- Asset-backed lending
- Working capital facilities
This allows buyers to complete acquisitions confidently without creating unnecessary pressure on cashflow.
Why Businesses Are Acquiring in 2026
Despite ongoing economic pressures, acquisition activity remains strong across many sectors.
Businesses are increasingly using acquisitions to:
- Increase market share
- Expand geographic reach
- Acquire skilled teams
- Strengthen supply chains
- Diversify services
- Improve operational efficiencies
- Acquire intellectual property or contracts
For many businesses, acquisition can offer a faster route to growth than building organically.
The key is ensuring the funding structure supports both the transaction and the long-term health of the business.
The Importance of Structured Funding
Acquisition finance is rarely a “one lender, one solution” process.
Modern transactions often involve layered funding structures designed around the needs of the deal.
A well-structured facility should support:
- The initial purchase
- Working capital requirements
- Integration costs
- Future investment plans
- Deferred payments
- Ongoing business growth
Working with specialist finance brokers can help businesses access lenders who understand acquisition funding and can structure facilities around complex transactions.
Case Study – £4 Million Business Acquisition for London Kitchen Manufacturer
A London-based kitchen manufacturer approached BFS after agreeing terms to acquire another established manufacturing business for £4 million.
The acquisition would significantly increase production capacity, expand the company’s customer base, and strengthen its position within the commercial interiors sector.
The challenge was raising sufficient capital for the upfront payment while preserving working capital to support the enlarged business post-completion.
Funding Structure Arranged:
-£750,000 raised through an Invoice Finance facility against the combined debtor book
-£500,000 Growth Guarantee Scheme (GGS) Loan
-Additional shareholder contribution used towards completion
-Deferred consideration structure agreed with the seller for part of the remaining balance
The invoice finance facility provided immediate liquidity on day one following completion, helping the business maintain healthy cashflow while integrating operations and servicing increased demand.
The combined funding structure allowed the acquisition to complete successfully without placing excessive strain on the company’s existing reserves.
Is Acquisition Finance Right for Your Business?
You may benefit from acquisition finance if your business is looking to:
- Acquire a competitor
- Expand into new markets
- Purchase another trading business
- Fund a management buyout
- Raise working capital post-acquisition
- Fund deferred consideration payments
- Preserve cashflow during expansion
With the right funding structure in place, acquisitions can become a powerful tool for long-term growth.
Talk to BFS About Acquisition Funding
Every acquisition is different, and funding structures should be tailored around the transaction, the business, and the long-term strategy.
At BFS, we work with businesses across a wide range of sectors to help structure practical acquisition funding solutions, whether for the initial purchase, deferred consideration, or ongoing growth capital.
If you’re considering acquiring a business or exploring funding options for an upcoming transaction, we’d be happy to discuss the opportunities available.
Get in touch with the BFS team for an informal conversation about how we may be able to support your acquisition plans.
