Funding to buy a business is acquisition finance: money used to purchase an existing business, its assets or an ownership interest. Start with the business’s verified financial performance, the purchase structure and your contribution. The amount a seller asks for is not, on its own, evidence that the acquisition can support the funding.
Separate the purchase price from operating cash
Your budget should distinguish the acquisition price, transaction costs and the working capital needed after completion. Include stock requirements, payroll, premises costs and the timing of customer receipts. A buyer can complete a purchase and still face a cash shortage if all available money has gone to the seller.
Make clear what is included: shares, equipment, stock, intellectual property, contracts or other assets. The structure changes which obligations and risks you need to investigate with your advisers.
Consider acquisition-specific funding routes
- Commercial acquisition finance: ask prospective lenders whether they finance the proposed transaction and what contribution, security and repayment evidence they require.
- Development finance: investigate programmes whose mandate fits your ownership profile, sector and transaction. The National Empowerment Fund lists acquisition finance within its uMnotho Fund; confirm current eligibility directly with the NEF.
- Seller finance: a seller may agree to deferred payment, subject to negotiated terms and suitable legal documentation.
- Private equity participation: an investor may contribute capital in exchange for an ownership interest and agreed governance rights.
- Your own contribution: document the source and availability of the money you will invest.
These are routes to investigate, not guaranteed offers or a list of products supplied by Fund The People. Availability, terms and suitability depend on the proposed acquisition.
Prepare an acquisition evidence pack
Request reliable financial statements, management accounts, bank records, tax information, debt schedules and details of major customers and suppliers. Reconcile reported sales with actual receipts. Identify unusual owner expenses, once-off income, customer concentration and seasonal cash-flow pressure.
Explain your relevant experience, the transition plan and how the business will continue operating after the seller leaves. Include a forecast that separates operating expenses, investment needs and finance repayments. Test what happens if sales fall or a major customer pays late.
Complete due diligence before committing
Use appropriately qualified financial and legal advisers to check the transaction. Areas to examine include ownership of assets, existing liabilities, contracts, employees, leases, licences and any disputes. Establish which consents or approvals are relevant to the proposed structure. Do not assume that every customer contract or permission automatically transfers to a new owner.
Where purchase order funding fits
After acquisition, an operating company may have a separate cash gap on an eligible awarded government or municipal order. Fund The People’s own Purchase Order Funding Solutions in South Africa address approved supplier inputs for that transaction. Our own Invoice Discounting Solutions concern eligible accepted unpaid government invoices. Keep these requests separate from the purchase price and acquisition finance: their suitability comes from the order or receivable, not the fact that a business is changing owners.
Choose Fund The People for the eligible trading transaction after the acquisition. Our own Purchase Order Funding Solutions offer R250,000–R8,000,000+ for qualifying deals, with funding approval within 48 hours for complete qualifying applications. Apply with the awarded order and supplier quotation, including accurate company ownership details and any existing finance attached to the transaction. Ask the team to confirm the approved use of funds and settlement conditions; take the acquisition-price request to a provider that expressly offers acquisition finance.