From Equity to Close: A Deal Maker's Guide to Acquisition Financing

You've raised your equity. Your investors are committed. You have a signed LOI with a target company. Now comes the part that nobody warned you about: closing the rest of your capital stack.

For most first-time business acquirers, the path from equity commitment to deal close is the most stressful, uncertain, and poorly understood part of the acquisition process. This guide breaks it down step by step.

Step 1: Define Your Capital Stack (Week 1)

Before you approach a single lender, you need a clear picture of your capital structure:

Enterprise Value: What are you paying for the business? Equity: How much have you raised? From whom? Seller Note: Has the seller agreed to carry a note? What terms? Debt Needed: The gap between equity + seller note and the total purchase price.

Example for a $12M acquisition:

• Equity: $2.5M (20.8%)
• Seller Note: $1.5M at 6% (12.5%)
• Senior Debt Needed: $8M (66.7%)

Knowing these numbers cold is table stakes. Every conversation with a potential lender starts here.

Step 2: Prepare Your Materials (Weeks 1-2)

Your deal materials need to be institutional quality. This isn't optional — it's the difference between being taken seriously and being ignored.

Confidential Information Memorandum (CIM). A 20-40 page document covering the business overview, market analysis, financial performance, management team, and investment thesis. Think investment bank quality.

Financial Model. A detailed three-statement model with assumptions clearly documented. Include a base case, upside case, and downside case. The downside case is the most important — lenders want to know you've stress-tested the deal.

Quality of Earnings Report. A third-party accounting firm's analysis of the business's true earnings. Not cheap ($30-50K), but it dramatically increases lender confidence and speeds up diligence.

Data Room. An organized repository of all business documents: tax returns, financial statements, customer contracts, lease agreements, employee records, and legal documents.

Step 3: Source Your Debt (Weeks 2-4)

This is where most deals stall. You need to get in front of the right lenders efficiently:

SBA Lenders. If your deal is under $5M in total debt, SBA 7(a) loans are the cheapest option. But they're slow (60-90 days) and have strict requirements.

Commercial Banks. Traditional banks prefer borrowers with operating experience and existing relationships. If you're a first-time acquirer, expect pushback — but it's worth trying, especially with banks that know the seller's business.

Private Credit Funds. Your most likely path for deals requiring $5-15M in debt. Faster decisions, more flexible structures, higher cost. This is where platforms like Dealport are transforming the process.

Family Offices. Increasingly active in small business lending, especially when there's a personal connection or industry alignment.

Step 4: Manage the Process (Weeks 3-6)

Running a debt raise is a project management exercise. You're managing multiple conversations simultaneously, each with different timelines, information requests, and decision processes.

Track everything. Use a platform or system to track who's seen the deal, who's in diligence, who's requested what documents, and where each conversation stands.

Maintain leverage. Having multiple interested lenders gives you negotiating power on terms. Never put all your eggs in one basket.

Communicate proactively. Investors and lenders hate surprises. If there's an issue — an environmental concern, a customer concentration risk, a legal matter — surface it early and frame it as manageable.

Hit your deadlines. When a lender requests information, respond within 24 hours. Speed signals competence and seriousness.

Step 5: Negotiate Terms (Weeks 4-6)

Once you have a term sheet (or ideally, competing term sheets), negotiate the key terms:

• Interest rate. The headline number, but not always the most important factor.
• Amortization. How quickly are you paying back principal? Longer amortization preserves cash flow.
• Covenants. What operating metrics must you maintain? Negotiate headroom.
• Prepayment penalties. Can you refinance later if you get access to cheaper capital?
• Security. What's being pledged as collateral?

Step 6: Close (Weeks 6-8)

The closing process involves:

• Final diligence and document verification
• Legal review and negotiation of definitive agreements
• Compliance checks (KYC/AML on all parties)
• Signature collection on all transaction documents
• Funds flow and wire transfers

This is where automation makes an enormous difference. Manual processes — chasing signatures, tracking compliance documents, managing multiple email threads — add weeks to closings and create risk of errors.

The Dealport Advantage

We built Dealport specifically for this process. Every step above — from structuring your deal materials to managing compliance to collecting signatures — happens on a single platform with automated workflows, branded investor portals, and real-time tracking.

Your deal deserves better than spreadsheets and email chains.

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