In addition to the classic financing options (cash, shares) for company acquisition, due to the interest rates on debt capital, the possibilities of financing company acquisitions by means of debt capital are increasingly being used.
Debt capital
- Seller loan: part of the purchase price is deferred to the buyer by the seller in the form of a subordinated loan and paid, including interest, in the future
- Earn-out: part of the purchase price is paid in the future depending on the achievement of the target.
- Bank financing: classic bank loans
- Public development loans: e.g. KfW in Germany, guarantee banks, mezzanine and public grants
Alternative ways of acquiring a company through equity capital
- Share swap: exchange of shares in one company for shares in the other company (“contribution to another company in exchange for shares in that company”)
- Roll-over: the seller takes a percentage of the proceeds of the sale in the buyer’s company or in an intermediate company that takes over the seller’s company.
- Private equity: parts of the purchase price are financed by equity and/or debt capital from investment companies.
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