Taking Security In Acquisition Finance

INTRODUCTION

When acquiring a company or business, one of the main issues for an acquirer is how to finance the acquisition. Except the acquirer is in a position to complete the deal using existing cash reserves, its main sources of funding for the transaction will usually be either (or a combination) of debt finance (by borrowing from banks and other financial institutions by way of loans or debt securities) or equity finance (through the issuance of new shares to existing shareholders and/or third party investors). So, essentially, acquisition finance refers to the different sources of capital for funding an acquisition. It is usually a complex process which requires thorough planning as acquisition finance structures come with a lot of variations and lending sources unlike most other transactions.¹