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Lender-ready acquisition planning

What should a business acquisition funding model contain?

A robust model does more than forecast profit. It shows whether the buyer can complete the deal, run the business and repay the funding—even when trading falls below plan.

Book a Free ConsultationExplore the Essentials

A lender needs to see

One coherent picture connecting the deal, the business and the debt.

  • A credible purchase and funding structure
  • Evidence-based maintainable cash flow
  • Debt service in base and downside cases
  • Visible assumptions, risks and mitigations
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Can the buyer complete the acquisition, operate the business successfully and repay the proposed funding under both the base case and a credible downside case?

That is the central question every acquisition funding model must answer.

The essentials

Twelve building blocks of a lender-ready model

The figures must align with due diligence. Material assumptions, adjustments and unresolved issues should be visible—not buried.

1

Transaction summary

Explain the business, buyer, purchase price, funding request, equity contribution, security, risks and expected outcome.

  • Why the deal makes sense
  • Why the seller is selling
  • Why the buyer can deliver
  • Base and downside funding metrics
2

Buyer and acquisition structure

Show who owns, acquires and borrows—and how cash reaches the borrower.

  • BidCo and group structure
  • Buyer equity and evidence of funds
  • Co-investors, guarantees and other commitments
  • Buyer salary, pension and distributions
3

Transaction mechanics

Model exactly what is bought, what is excluded and how the final price will be determined.

  • Share, asset, partial or staged purchase
  • Cash-free, debt-free and working-capital terms
  • Completion accounts or locked box
  • Deferred consideration, earn-out and costs
4

Sources and uses

Provide a clear completion statement covering the deal and realistic opening liquidity.

  • Consideration, debt repayment, tax and fees
  • Immediate capex and restructuring
  • Working capital and minimum cash
  • Equity, senior debt, asset finance and seller funding
5

Business and market

Show how the company makes money, why customers buy and what protects—or threatens—future performance.

  • Products, customers and route to market
  • Competition, regulation and licences
  • Suppliers, people, premises and assets
  • Market evidence supporting the forecast
6

Historic performance and EBITDA

Reconcile at least three years of history, preferably five, to a defensible level of sustainable earnings.

  • Statutory and monthly management accounts
  • Reported, seller-adjusted and maintainable EBITDA
  • Evidence for every normalisation
  • Market-rate replacement and additional costs
7

Driver-based forecast

Build revenue and cost assumptions from the activities that create them—not an unsupported growth percentage.

  • Volume, price, pipeline and conversion
  • Contracts, retention, churn and seasonality
  • Fixed, variable and stepped costs
  • Capacity, inflation and implementation timing
8

Customers, suppliers and management

Make concentration and key-person dependencies visible and quantify their downside effect.

  • Top customers, contracts and renewals
  • Major-customer-loss scenario
  • Supplier alternatives and credit terms
  • Seller handover, retention and succession
9

Working capital, capex and tax

Convert profit into cash using realistic operating assumptions and unavoidable investment.

  • Debtor, creditor and inventory days
  • Seasonal peaks, growth and facility limits
  • Maintenance and growth capex
  • Corporation tax, VAT, stamp taxes and allowances
10

Funding and repayment

Model every facility separately, using the lender’s actual commercial terms.

  • Interest, fees, term and amortisation
  • Repayment holidays, sweeps and balloons
  • Covenants, security and guarantees
  • Seller finance and deferred payments
11

Post-acquisition plan

Translate the first 100 days and longer-term plan into accountable, timed and funded actions.

  • Management, systems and controls
  • Banking, payroll, insurance and IT
  • Transition and integration costs
  • Evidence-based growth initiatives
12

Downside testing

Demonstrate resilience through individual and combined severe-but-plausible scenarios.

  • Revenue, margin and customer shocks
  • Slower collections and reduced supplier credit
  • Higher interest, payroll, capex and costs
  • No growth, delayed savings and seller replacement
Inside the model

A fully integrated view—not disconnected spreadsheets

Forecast monthly for at least the first 36 months and annually thereafter. Five years is typical, but the model should cover the full funding term.

Assumptions and evidenceSource register, historic statements and normalised EBITDA bridge
Operating forecastRevenue, payroll, working capital, capex, depreciation and tax
Transaction schedulesSources and uses, opening balance sheet and deferred consideration
Funding schedulesDebt, interest, repayments, covenants and lender definitions
Integrated statementsProfit and loss, balance sheet and cash flow
Decision outputsDashboard, scenarios, sensitivities and integrity checks
Important: legal, tax and accounting assumptions should be confirmed by the transaction’s relevant advisers.
Lender outputs

The numbers funders expect to see

Every ratio must use the proposed lender’s precise definition. EBITDA, net debt and cash flow available for debt service can vary materially between lenders.

ValuationPurchase price and enterprise value to maintainable EBITDA
LeverageTotal debt and senior debt to EBITDA
CoverageInterest, debt-service and fixed-charge cover
LiquidityMinimum cash and working-capital facility use
HeadroomCovenant headroom under base and downside cases
Returns and repaymentEquity contribution, buyer cash return, annual debt service and balloon
Acquisitions Advisory

Know what the business can afford before you commit.

We build lender-ready acquisition models that show how much you can borrow—and whether the business can repay it. Funding a major investment rather than an acquisition? See what a project finance model for a lender should contain.

Book a Free Consultation

Test your acquisition funding structure

Use our free calculator to compare cash available for debt service with vendor finance and commercial loan repayments.

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