Post-sale cash
requirements
Further funds may be required to support the operations of the business after purchase. It is advisable to arrange this financing at the same time as the funding of the purchase price as it can be challenging after purchase since the assets of the company will be burdened by purchase debts.
Typically, the same lender that funds the transaction provides this facility. In this way the buyer will save time by not having to deal with inter-creditor agreements between lenders. Even if the purchased business is performing well, it might be tough to get more finance following an acquisition so purchasers should plan the cash flow requirements of the business several years ahead and ensure that sufficient funds are available
Facilities such as invoice discounting which increase in line with trading are often a good way to reduce the risks of post-acquisition cash management.