Acquisition finance is a term referring to the different sources of capital used to fund mergers and acquisitions. Usually complex in structure, acquisition finance requires a tailored approach and the acquisition itself requires thorough planning – often more so than other business purchases.
The financing of an acquisition can come from multiple sources, with one of the key challenges finding the appropriate mix of financing that offers the lowest cost.
Companies can grow in a variety of ways, including by increasing their workforce, launching new services and products, reaching new customers and expanding their marketing. However, synergistic acquisitions are a proven strategy for achieving growth quickly and efficiently, as well as offering other benefits, such as increased market share and economies of scale.
The acquisition of another company is a major decision that requires sound financial resources.
Benefits of acquisition finance
As far as growth strategies go, acquisition financing is one of the most popular and effective tactics when implemented. Acquisition financing is time-efficient, giving companies the opportunity to acquire resources or competencies they might otherwise struggle to find.
Companies can also increase market presence and gain a competitive advantage by acquiring another business, as well as easily navigating new and different markets by gaining new capabilities and resources.
Acquisition financing can help companies meet shareholder expectations for growth and returns, and can also lead to financial gain as well. Companies seeking expansion, growth and boosted returns can benefit from considering this course of action.