Most business purchases are funded in layers, known as the capital stack, rather than from a single loan. Each layer is sized to the earnings of the business you're buying and to how much personal risk you're prepared to take.
The layers
- Senior debt: a cash-flow-led loan over 3 to 7 years, sized to the target's maintainable earnings. The biggest layer in most deals.
- Mezzanine or unitranche: sits behind the senior debt and fills the gap above what the assets can support. It costs more because the lender takes more risk.
- Vendor loan or deferred consideration: the seller leaves part of the price in the business and is paid later. Often the lever that gets a deal across the line. See What is vendor finance?.
- Your equity: your own money in the deal, typically 10% to 30% of the price, less with strong vendor support. See How much deposit do I need to buy a business?.
An example
On a £1 million purchase, one possible stack is:
- senior debt: £600,000 (60%)
- mezzanine: £150,000 (15%)
- vendor loan: £150,000 (15%)
- your equity: £100,000 (10%)
Here you'd need £100,000 in cash on day one, and lenders would fund 75% of the price. This is illustrative only. Real structures depend on the target's earnings, sector and assets, and on you as the buyer.
Other layers
Some deals add asset finance or invoice finance secured on the target's assets, or a Growth Guarantee Scheme facility. See Can I use a Start Up Loan or the Growth Guarantee Scheme to buy a business?.
Getting the stack right
Too little of your own money, or too much short-term debt, can leave the business short of cash after completion. We build the stack around what the business can comfortably service.
Last reviewed: 8 October 2026