Financing an acquisition: calculate the full budget

A business’s asking price is only part of the money needed to take it over. Before discussing a loan, calculate the initial expenses and the cash that will keep the operation running.

1. Add up every requirement

Your budget should distinguish:

• the price of assets or shares and the stock acquired;
• the rental deposit and other guarantees;
• advisory and transaction fees;
• improvements and equipment to finance;
• cash needed for the first few months;
• a contingency reserve suited to the project.

Avoid counting an item twice if it is already included in the purchase price. For each expense, specify the amount, payment date and proposed funding source.

2. An illustrative example

This is a teaching example, not a valuation or a financing offer:

Item	Amount (CHF)
Purchase price	180’000
Stock	40’000
Rental deposit	18’000
Fees and investment	22’000
Initial working capital	50’000
Reserve	20’000
Total requirement	330’000

If you secure bank financing of CHF 150’000, CHF 180’000 remains to be covered by your own funds or other confirmed financing. That gap relates to the complete budget, not just the purchase price.

3. Determine a realistic contribution

No single equity percentage fits every project. The sector, guarantees, cash flows, price and your experience influence the lender’s assessment. The SECO SME portal explains the basics of succession financing, in French.

Separate money actually available from financing still under negotiation. Protect your personal budget too. If you are considering pension assets, have the conditions and consequences checked before including them in your plan.

4. Consider complementary financing

A seller loan, business partner, guaranteed loan or equipment financing may help complete the package. Each has costs and conditions: repayments, interest, security, decision-making rights or profit sharing.

A price partly linked to future results also requires precise calculation and verification rules. Compare several scenarios and their effect on monthly cash flow.

5. Prepare for the funding meeting

Bring the business accounts, your project presentation, important contracts, a forecast budget and a cash-flow plan. Test a less favourable scenario: lower sales, delayed improvements or higher costs.

Record your target budget, questions and next deadline in your Avidia project. Update it as you receive concrete offers.