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Optimal Acquisition Financing Structures

Optimal Acquisition Financing Structures

Submitted by • February 26, 2020 www.attractcapital.com

Acquisition financing structures are often thought of in a one size fits all manner. The dominant structures include a meaningful equity investment percentage in the range of 25% to 35% coupled with debt financing for the remaining percentage of 65% to 75%. While this is a perfectly fine structure, many independent buyers don’t have 35% of the purchase price as equity to invest, which makes this a non-starter. At the same time, lenders have evolved to become more risk tolerant and are able to provide debt securities that play virtually the same role as equity.

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