Growth through the financing of a company takeover

Compa­ny acqui­si­ti­on: An overview of all subsi­dies for financing

Anyone who wants to become an entre­pre­neur needs capital. Especi­al­ly when buying a compa­ny, the capital requi­re­ment is much higher than when start­ing a new business.

It is there­fo­re important to know what finan­cing options are available. Moreo­ver, it makes sense, to make the best possi­ble use of its oppor­tu­ni­tiesto obtain the most attrac­ti­ve conditions.

Don’t have much time to read? Our artic­le at a glance:

  • For compa­ny acqui­si­ti­ons and succes­si­on capital requi­re­ments and finan­cing plan must be careful­ly thought through

  • A meaningful Mix of equity, debt and funding program­mes Ensures a stable finan­cial basis

  • The Finan­cing discus­sions with the bank do not have to be unplea­santif you take our tips to heart

Deter­mi­ne capital requirements

With a Compa­ny takeover and the purcha­se in the context of a business succes­si­on, the capital requi­re­ment in connec­tion with the purcha­se price is the most important milestone. Only when the capital requi­re­ment is known can one begin to make a to develop a corre­spon­ding finan­cing concept and raise the neces­sa­ry funds.

When deter­mi­ning the capital requi­re­ments, it is important to calcu­la­te in such a way that a future growth phase or invest­ments after the takeover also relia­bly cover the liqui­di­ty requi­re­ments. In the worst case scena­rio, if the finan­cing frame­work is too small, bank discus­sions will have to be held again just a few months after the takeover. Post-acqui­si­ti­on finan­cing is not one of the easie­st tasks for the finan­cing partner and the entre­pre­neur. If, on the other hand, too much capital is raised for the business acqui­si­ti­on, unneces­sa­ry costs are incur­red, e.g. in the form of interest.

In the case of a compa­ny acqui­si­ti­on, the immedia­te capital requi­re­ment is usual­ly higher than in the case of a new start-up. Becau­se a Compa­ny takeover or business succes­si­on is more expen­si­ve than start­ing a new business. Where­as with a new start-up the capital requi­re­ment is spread over a longer period of time, a business takeover or succes­si­on is much more capital inten­si­ve at the time of purcha­se. The buyer takes over a comple­te founda­ti­on, such as machi­nery, vehic­le fleet, stocks and has running costs, such as salaries, rents, etc.

The biggest cost in taking over a compa­ny is, of course, the purcha­se price itself. In additi­on, the fixed assets (if unusual­ly not included in the purcha­se price) can be added. Invest­ments that may be neces­sa­ry, e.g. for moder­ni­sa­ti­on, must also be taken into account when deter­mi­ning the total capital requirements.

Added to this are the liqui­di­ty requi­re­ments for running costs and the procu­re­ment of possi­ble use of goods.

Depen­ding on the form of the compa­ny, the buyer should also take into account his priva­te capital requi­re­ments. After all, living expen­ses and priva­te obliga­ti­ons must also be met. As a rule, the entre­pre­neur (does not apply to corpo­ra­ti­ons) withdraws a certain amount every month for priva­te purpo­ses. This money is then no longer available to the compa­ny and, in the event of a criti­cal business develo­p­ment, strai­ned liqui­di­ty can cause a bottleneck.

Business valua­ti­on

In order for the seller and buyer to agree on a purcha­se price, a compa­ny valua­ti­on makes sense. Often the two parties’ ideas about the value of the compa­ny natural­ly diverge.

For the seller, the compa­ny usual­ly also has a high emotio­nal value. The buyer lacks this and under­stan­d­a­b­ly does not want to pay for it.

An objec­ti­ve value can be deter­mi­ned through a compa­ny valua­ti­on. You can easily use a calcu­la­tor on the Inter­net for a simple calcu­la­ti­on (but this is then usual­ly only the “thick thumb”) of the respec­ti­ve company.

However, it makes sense to carry out a detail­ed analy­sis and calcu­la­ti­on of the compa­ny. This will The valua­ti­on is deter­mi­ned prima­ri­ly with the capita­li­sed earnings value method, accor­ding to the recog­nis­ed standard IDWS1 or, in the case of craft enter­pri­ses, also accor­ding to the AWH method. In Austria, the valua­ti­on is based on the KFS/BW 1 expert opinion.

It is important to turn to an experi­en­ced manage­ment consul­tancy for a compa­ny valua­ti­on. They are famili­ar with the relevant proce­du­res and can deter­mi­ne the compa­ny value profes­sio­nal­ly and trans­par­ent­ly. A well-founded compa­ny valua­ti­on is also advan­ta­ge­ous for taking out a loan with a bank or savings bank.

Use our compa­ny value assess­ment from more than 2,000 compa­ny valuations.

Finan­cing a compa­ny acqui­si­ti­on: basic finan­cing structures

Who has a Buy compa­ny not only needs to know how much capital it needs, but also how to raise it. There are several possi­bi­li­ties and diffe­rent struc­tures. In some cases, the transi­ti­ons are fluid and the indivi­du­al forms of finan­cing cannot be clear­ly distin­gu­is­hed from one another. It is there­fo­re all the more important to to think careful­ly in advan­ce about how the capital for the compa­ny purcha­se is to be raised. Before you search through the flood of infor­ma­ti­on on the inter­net, we will give you a compre­hen­si­ve overview here.

Financing company acquisitions with basic financing structures


In the case of a compa­ny acqui­si­ti­on approx. 10 to 30 percent equity capital (own funds/ colla­te­ral) should be available. This secures the basic finan­cing with a bank and makes it easier to raise the remai­ning capital. Funding program­mes often requi­re a certain equity ratio. Banks and savings banks grant a loan more easily with a higher ratio (lower risk).

However, there are also finan­cing partners who provi­de special forms of equity, which is usual­ly more expen­si­ve than classic bank financing.

Equity capital

In this process, exter­nal inves­tors provi­de money to the compa­ny. And they do so without the usual colla­te­ral. Long-term parti­ci­pa­ti­on has a positi­ve effect on the buyer’s credit rating. This streng­thens the basis for negotia­ti­ons with banks.

There are two types of share­hol­dings in a compa­ny: the dormant share­hol­ding and the open shareholding.

Debt capital

Debt capital is always debt or liabi­li­ties. Debt capital can be raised from a wide varie­ty of lenders in various forms.

Bank loan

Taking out a loan from the house bank is the classic case of a loan. In order to obtain a loan in the desired amount, thorough planning and a sound business plan are absolut­e­ly neces­sa­ry. In additi­on, suffi­ci­ent time must be planned, as the bank requi­res a certain proces­sing time.

Invest­ment credit

If the loan is prima­ri­ly needed to finan­ce certain invest­ments after the compa­ny purcha­se, the buyer can take out an invest­ment loan.

There are special commer­cial banks for this and also options of public funding. The amount of the loan should depend on the company’s earnings and be repaya­ble in four to seven years.

Priva­te loans

With priva­te loans (e.g. in the family with parents or relati­ves and friends) every­thing is possi­ble. There are no restric­tions regar­ding the loan amount, term, interest, colla­te­ral and repay­ment. However, it is advisa­ble to regula­te all these frame­work condi­ti­ons contrac­tual­ly. Credit agree­ments should always be in writing. This is how to avoid trouble in connec­tion with the purcha­se of a company.

Priva­te inves­tors can be any person who is willing to invest in the compa­ny or in the future owner or shareholder.

Promo­tio­nal loan

These are made possi­ble by special Promo­tio­nal banks of the federal states and KfW. The aim of these banks is to support start-ups and business successions.

They grant publicly subsi­di­sed and low-interest loans. A subsi­di­sed loan is available in many diffe­rent variants. Often there are repay­ment-free years at the begin­ning of the loan term. Many promo­tio­nal loans also offer a release from liabi­li­ty. This reduces the default risk for the bank. In additi­on, it may be willing to grant a loan if the colla­te­ral is insufficient.

Most promo­tio­nal loans can be appli­ed for via the house bank.

Mezza­ni­ne capital incl. example

The Mezza­ni­ne capital is a special form of finan­cing. It repres­ents a hybrid form of equity and debt capital.

Depen­ding on the form it takes, banks value it as debt or equity capital. This increa­ses the credit­wort­hi­ness, as it increa­ses the equity ratio.

There are diffe­rent forms of mezza­ni­ne capital. The most common form is the silent partnership.

In the case of a silent partner­ship, a share­hol­der pays a contri­bu­ti­on. However, he does not recei­ve any shares in return. In return for his contri­bu­ti­on, he recei­ves a share in the profit or loss. However, the silent partner does not parti­ci­pa­te in the assets of the company.

It also does not appear extern­al­ly, does not inter­fe­re in the manage­ment of the compa­ny and does not have any other rights of co-determination.

In our online seminar on compa­ny acqui­si­ti­ons, you will be compre­hen­si­ve­ly prepared for this complex topic.


Mr Müller would like to take over a compa­ny. This compa­ny succes­si­on costs 500,000 EUR. He himself has 25,000 EUR in own funds. This corre­sponds to an equity ratio of 5 percent. This is too little to apply for subsi­dies and a loan from his bank. He there­fo­re looks for a silent partner.

This person contri­bu­tes EUR 100,000 to the compa­ny. This money is conside­red equity, as the silent partner does not have a stake in the compa­ny and also has no rights or obliga­ti­ons. He only parti­ci­pa­tes in the profit or loss of the compa­ny. The parti­ci­pa­ti­on is subordinate.

Overall, Mr. Müller can there­fo­re now show an equity ratio of 25 percent. This streng­thens his credit­wort­hi­ness enorm­ously. This means that he has a good chance of closing the remai­ning finan­cing gap with subsi­dies and a loan.

Example: Contribution of silent partners to increase the equity ratio

The Vendor Loan / Vendor Loan

With a Seller loan the loan comes direct­ly from the seller of the compa­ny. He thus “defers” part of the purcha­se price to the buyer and acts as a bank himself.

This means that the buyer does not have to pay the entire purcha­se price when buying the compa­ny, but can pay part of it later or even in instal­ments. This means an enorm­ous relief for the buyeras he can then use this money for other purposes.

The vendor loan is also a vote of confi­dence. It shows that the vendor belie­ves in the conti­nua­tion of the compa­ny. This also has a positi­ve effect on the bank, where a further loan may have to be appli­ed for.

A vendor loan can/must also be contrac­tual­ly struc­tu­red as a subor­di­na­ted loan. This means that the seller only gets his money back after all other creditors.

This is also positively asses­sed by a bank.


The federal govern­ment, the Länder, local autho­ri­ties and also the EU offer numerous support program­mes. Under certain condi­ti­ons, they provi­de money for the purcha­se of compa­nies. The aim is to promo­te the econo­my of regions and to secure or expand jobs.

Public funding must always be appli­ed for before the takeover. This is not possi­ble retroactively.

The follo­wing funding can be appli­ed for:

KERN subsidies for company acquisitions - KfW Bank
KERN Subsidies for the purchase of a company - public development banks

KfW Bank: ERP capital for start-ups

  • Various subor­di­na­ted loans up to EUR 500,000 are offered
  • Credit is attri­bu­ted to equity
  • Entre­pre­neurs do not have to provi­de collateral
  • Perso­nal liabi­li­ty is required
  • There must be 15 per cent equity capital
  • Together with the equity capital, up to 45 percent of the purcha­se price can be financed

Public develo­p­ment banks

  • z. E.g. guaran­tee banks
  • Loan and equity financing
  • Issuan­ce of state guaran­tees for submis­si­on to the house bank
  • Equity ratio is increased

The forms of finan­cing at a glance

The acqui­si­ti­on of a compa­ny requi­res a large amount of capital. In the rarest cases, this is available in own funds. But there are many possi­bi­li­ties. Both the house bank and business partners, family, priva­te inves­tors and the state can provi­de funds. Even the seller of the compa­ny is eligi­ble as a lender.

Depen­ding on the finan­cier, there are many diffe­rent forms of finan­cing. A finan­cing mix of diffe­rent forms is usual­ly the best option.

Examp­le financing

As alrea­dy descri­bed, Mr. Müller would like a Buy a compa­ny with a capital requi­re­ment of EUR 500,000. He brings EUR 25,000 in equity capital. A silent partner contri­bu­tes EUR 100,000 to the company.

Next, Mr Müller appli­es for funding. He recei­ves another EUR 200,000 via KfW Bank. He does not need any colla­te­ral for this and this money is also added to the equity capital.

Now he needs another EUR 175,000. He gets this loan from his house bank at the desired condi­ti­ons without further searching, since he can demons­tra­te good solven­cy through previous fundraising.

Example of complete financing for the acquisition of a company

11 tips for talking to a bank

If you want to take out a loan from the bank to buy a compa­ny, you have to be well prepared. The bank must be convin­ced. Becau­se the bank calcu­la­tes its default risk. The higher this is, the more expen­si­ve the loan will be in terms of costs and repayment.

1. basic princi­ples: mapping collateral

In order to impro­ve your perso­nal credit­wort­hi­ness, you can provi­de the bank with colla­te­ral. These can consist, for examp­le, of mortga­ges on real proper­ty. Other forms of colla­te­ral include claims against third parties, other tangi­ble assets, cash reser­ves and securities.

If you no longer have any colla­te­ral of your own, you can also appoint guaran­tors. These can be business partners or friends and family in parti­cu­lar. In the event of an emergen­cy, they will stand in for the liabilities.

2. comple­te documentation

A loan appli­ca­ti­on to the bank should be well prepared. The more documents about the compa­ny are provi­ded to the bank, the better. The documents should be well and thoughtful­ly prepared and, above all, transparent.

The bank wants to get an accura­te insight into the compa­ny. Both into the past and into the future in the form of forecasts. This has a considera­ble influence on the granting of loans.

In order to be optimal­ly prepared, it is advisa­ble to ask before the bank inter­view which documents are absolut­e­ly necessary.

However, the follo­wing documents are relevant in any case:

Descrip­ti­on of the invest­ment project

This descrip­ti­on must contain all important data about the compa­ny. In additi­on, the advan­ta­ges of the compa­ny should be descri­bed in detail. But also the invest­ment calcu­la­ti­on and the reali­sa­ti­on period, the requi­red loan amount and the repay­ment modali­ties should not be missing from this description.

Annual finan­cial state­ments with balan­ce sheet or income statement

With the infor­ma­ti­on on the earnings and finan­cial situa­ti­on, important key figures can be calcu­la­ted. These include, for examp­le the company’s return on sales, return on equity and cash flow.

These ratios are an important reference point for the bank. It makes sense to submit these documents with an audit certi­fi­ca­te from the tax advisor.

Current business manage­ment analy­sis (BWA)

This shows the compo­si­ti­on and develo­p­ment of income and expen­ses. The bank is thus compre­hen­si­ve­ly infor­med about the course of the current business year.

The BWA also includes a list of totals and balan­ces as well as infor­ma­ti­on on depre­cia­ti­on, changes in inventories.

Turno­ver and profit plan with explana­to­ry notes

The possi­ble develo­p­ment of a compa­ny is one of the most important aspects for the bank. Here, the possi­ble turno­ver as a result of detail­ed sales planning must be compared to the neces­sa­ry expenses.

Liqui­di­ty plan with explanations

The liqui­di­ty plan shows the month­ly income and expen­dit­u­re. The liqui­di­ty plan should be drawn up for the current and coming business year of the compa­ny. Payment dates and due dates should also be listed. In this way, the month­ly surplus or deficit can be calcu­la­ted and, if neces­sa­ry, clari­fied with the bank.

List of payables and receivables

This list plays an important role for the bank when granting a loan. It uses it to assess the solven­cy of a corpo­ra­te loan. In the case of receiv­a­bles (debtors), it asses­ses the solven­cy of the debtors.

3. finan­cial statements

In order to give the bank a compre­hen­si­ve insight into the compa­ny, the balan­ce sheets and interim balan­ce sheets of the last 3 years should be available. The results of the current year should also be available at the bank meeting.

4. suita­bi­li­ty and motiva­ti­on of the buyer

The bank attaches importance to the suita­bi­li­ty of the buyer. For this purpo­se, a distinc­tion is made between two factors. Both profes­sio­nal and commer­cial suita­bi­li­ty count. These points are easy to check. Something The motiva­ti­on of the buyer in the purcha­se of a compa­ny is more diffi­cult. However, this should be present to the extent that the buyer also recei­ves the accep­tance of the employees. Only in this way is it possi­ble to conti­nue the compa­ny successfully.

11 tips for bank meetings when financing a company acquisition

5. business plan / business plan and forecasts after the takeover

The buyer’s own business plan is also important. The buyer should formu­la­te in his own words what plans he has after buying the compa­ny and how he intends to imple­ment them. This should also include forecasts of how the new entre­pre­neur sees his success and the further develo­p­ment of the company.

6. present the finan­cing concept

The bank is not only interes­ted in its own credit. For them, exten­si­ve infor­ma­ti­on is important. The buyer should there­fo­re present a coher­ent finan­cing concept. This should include the Compa­ny valua­ti­on, the purcha­se price and the corre­spon­ding finan­cings be listed for the acqui­si­ti­on of the company.

7. outline existing credits of the buyer

To give the bank a compre­hen­si­ve insight, all current loan agree­ments should be listed. The infor­ma­ti­on requi­red includes the amount of the loan, the repay­ment, remai­ning term and the collateral.

8. present repay­ment plan

For the bank, the repay­ment rate in combi­na­ti­on is an important point. The buyer should there­fo­re consider in advan­ce how high the loan should be, what the month­ly repay­ment can be and what term he needs. The more coher­ent and reali­stic the repay­ment plan is, the more likely the bank will appro­ve the desired loan. However, it is also important that the term is not too long. A shorter term is always useful to convin­ce the bank.

9. descri­be the hando­ver process / post-merger

The bank natural­ly wants to know exact­ly how the trans­fer of the business, or more precis­e­ly the Post Merger Integra­ti­on (PMI), is planned. Becau­se in order to be able to successful­ly conti­nue a compa­ny, this is an essen­ti­al point. After all, the buyer must be intro­du­ced precis­e­ly to the compa­ny struc­tures in order to gain a compre­hen­si­ve insight into the compa­ny. The accep­tance of the employees also depends on how the hando­ver of the compa­ny is planned. It is there­fo­re advisa­ble to submit a precise concept to the bank.

10. further develo­p­ment of the company

The bank is also interes­ted in the ACTUAL state of the compa­ny. But further develo­p­ment after the compa­ny has been acqui­red is also important. The buyer should there­fo­re think in detail about the changes he wants to make in order to push ahead with further develo­p­ment. In this context, further forecasts are useful. The more detail­ed and thoughtful the infor­ma­ti­on, the more likely it is that the bank will be convinced.

11. invol­ve M&A advice

In order to be as well prepared as possi­ble and to be able to present well-founded documents, it makes sense to make a M&A consul­ting for the entire compa­ny takeover. M&A consul­tanci­es usual­ly have many years of experi­ence and know exact­ly which documents need to be requi­red and prepared. Also with the Calcu­la­ti­on of key figures, prepa­ra­ti­on of forecasts, etc. supports M&A consulting.

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There are a varie­ty of finan­cing options for buying a compa­ny. A wide varie­ty of finan­cing mixes are possi­ble. However, the order in which the loan is drawn down is important, becau­se it affects the next step. Outside capital in the form of a loan from the house bank is usual­ly neces­sa­ry. However, this should be the last step to be taken.

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