Financing a Business Acquisition – How to Avoid Pitfalls

In this article, we explain how to properly structure financing for a business acquisition—and how to avoid common pitfalls.

Key Questions to Clarify in Advance

• What is the actual capital requirement? (Purchase price + incidental costs + liquidity reserve)

• Is the target company economically stable?

• Are there any funding programs or silent partnerships available?

• What monthly loan burden is realistic?

Therefore: Our calculator for business acquisition financing helps with assessment.

The 5 Most Proven Financing Components

1. Promotional Loans (e.g., KfW, State Banks)

• Grace period without repayments

• Low interest rates

• Possible even with low equity ratio

2. Seller Financing

• Partial payments spread over several years

• More favorable interest rates than bank loans

• Signals trust

3. Equity Capital (e.g., MBG)

• Complements loan financing

• Strengthens the equity ratio

• No direct influence on operational business

4. Guarantees from Guarantee Banks

• Substitute for missing collateral

• Improves loan conditions

5. Earn-Out Models

• Purchase price linked to future business performance

• Lower initial financial burden

Common Mistakes in Acquisition Financing

• Overly optimistic forecasts

• No liquidity buffer planned

• Financing gap due to incidental costs

• Insufficient communication with financing partners

Tip: Use the financing calculator for business successors to realistically simulate all components.

Conclusion

Financing a business acquisition requires structure, foresight, and realistic planning. With a well-thought-out concept and funding programs, you can confidently take the step into self-employment.