Business Acquisition Finance - Overview

What is Business Acquisition Finance?

Business acquisition finance is the funding used to purchase an existing business - one with established cash flow, a customer base, operating systems, and often a track record spanning years or decades. Unlike startup funding, acquisition finance is grounded in historical performance. Lenders can assess what the business has already done, not just what it might do.

The typical acquisition deal structure combines equity (your cash contribution) with senior debt from a bank or lender. In many cases, vendor finance plays a critical role - the seller agrees to leave a portion of the purchase price in the business, repaid over time. This aligns incentives: the seller only gets fully paid if the business continues to perform, which gives lenders additional comfort.

Lenders evaluate acquisition proposals by examining the target business's EBITDA (earnings before interest, tax, depreciation and amortisation), the implied acquisition multiple, debt service coverage ratio (DSCR), industry risk profile, and the buyer's relevant experience. DSCR is central to every deal - lenders want to see that the business generates enough cash flow to comfortably service its debt. How much is enough depends on the deal structure, the lender, and the broader context. This is where structuring the deal correctly, and choosing the right lender, makes all the difference.

This makes acquisition finance fundamentally different from other forms of business lending. It requires a deep understanding of deal structures, valuation, and the interplay between equity, debt, and vendor finance - not just filling in a loan application.

Entrepreneurship Through Acquisition (ETA)

Entrepreneurship Through Acquisition - known as ETA - is a pathway to business ownership where you acquire an existing profitable business rather than starting from scratch. The model originated in US business schools, where MBA graduates would raise a small search fund, spend one to two years finding the right business, then acquire and operate it. Today, ETA has expanded well beyond traditional search funds to include self-funded searchers, independent sponsors, and small private equity operators.

In Australia, the ETA ecosystem is still emerging but growing rapidly. A new generation of ambitious operators - many with corporate, consulting, or finance backgrounds - are choosing to buy and run established small and medium businesses rather than climbing the corporate ladder or launching venture-backed startups. The typical ETA target is a business generating $500K to $5M in EBITDA, often with an owner-operator looking to exit after decades of building the business.

ETA deals come in several forms: traditional search funds backed by a small group of investors, self-funded searches where the acquirer uses their own capital and bank debt, bolt-on acquisitions added to an existing platform, and management buyouts where an existing leadership team acquires the business from the current owner. Each structure has different financing requirements, and FGO has experience across all of them.

The challenge for ETA acquirers in Australia is that most banks and brokers don't understand the model. Lenders want to see operating experience, but first-time acquirers often come from adjacent backgrounds. Structuring the deal correctly - the right mix of equity, debt, and vendor finance, combined with a compelling narrative about the acquirer's capabilities - is critical to getting the deal funded.

How FGO Helps

FGO Finance Group brings deep specialisation in acquisition finance that goes well beyond standard business lending. We understand deal structures - not just loan products. That means we can advise on the optimal mix of senior debt, vendor finance, equity, and working capital facilities before you even approach a lender.

Our relationship with Australia's growing ETA community means we understand the unique challenges first-time acquirers face. We know which lenders are receptive to acquisition deals, which ones have appetite for goodwill-heavy transactions, and which ones will back a strong operator even without direct industry experience. We match your deal to the right lender - not the other way around.

For complex, multi-lender deals, we coordinate across parties to ensure the capital structure works as a whole. We've structured deals with split banking arrangements, tiered security, and blended vendor finance terms that wouldn't be possible with a single lender approach.

What We Offer

Types of Deals We Structure

Who This Is For

• First-time business buyers looking to acquire an existing profitable business
• ETA searchers and search fund operators pursuing acquisition-led entrepreneurship
• Existing business owners making bolt-on acquisitions to grow their platform
• Management teams executing MBOs to take ownership of the business they run
• Franchise buyers acquiring new territories or purchasing existing franchise resales
• Private equity firms seeking debt financing for portfolio company acquisitions

Our Process

Frequently Asked Questions

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