How to Finance a Business Acquisition in Canada

Buying an existing business is one of the fastest paths to growth. Here is how to structure the financing for a successful acquisition.

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By Chady Zahri, Chief Executive Officer · Updated April 1, 2026

Voxen insight

The best acquisitions are the ones where the target's cash flow pays for the acquisition. If a business generates $500K/year in cash flow after operating costs and the debt service on the acquisition is $400K/year, the deal funds itself. That is the math we help clients structure. The key is understanding cash flow coverage ratios and structuring debt accordingly.

Why Buy Instead of Build?

Acquiring an existing business gives you immediate revenue, an established customer base, trained employees, and existing processes. It eliminates the startup phase where most new businesses fail.

Types of Acquisition Financing

Senior debt (term loans secured by business assets), seller financing (where the seller carries part of the purchase price), mezzanine financing (subordinated debt), and equity co-investment. Most acquisitions use a combination.

What Lenders Look For

Cash flow coverage of the acquisition debt service (typically 1.25x or better), quality of the target's revenue and client concentration, management experience, and a clear transition plan.

Voxen Acquisition Financing: $500K–$50M

Voxen Capital structures acquisition financing from $500K to $50M with customized terms. We support leveraged buyouts, management buyouts, and strategic acquisitions with flexible collateral arrangements.

What to do next

Planning an acquisition? Voxen structures deals from $10K up to $50M. Get your financing framework in place before you make an offer.

Frequently asked questions

How much of the purchase price can be financed?

Typically 70-80% of the acquisition price can be financed through senior debt, with the remainder covered by buyer equity, seller financing, or mezzanine debt. The exact structure depends on the target's cash flow and assets.

Can I use seller financing as part of the structure?

Yes. Seller financing is common in business acquisitions and often covers 10-30% of the purchase price. It demonstrates the seller's confidence in the business and reduces the buyer's upfront capital requirement.

What due diligence do lenders require?

Financial statements (3 years), tax returns, client contracts, employee agreements, lease agreements, equipment lists, and a detailed transition plan. Lenders want to see that cash flow will continue post-acquisition.

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