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Basic of acquisitions

It is not always necessary to build a business from the beginning by yourself – an excellent alternative to become an entrepreneur is also through change of ownership such as business acquisition. Purchasing a business makes it possible to maintain the company’s prior achievements.


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Rarely does a business buyer pay the full purchase amount from their own money. In almost every case, the bank and Finnvera are involved in financing the transaction.

Increasingly, the seller also gives a longer payment period for part of the purchase amount, which allows the seller to get a better price for his business and the buyer, in turn, finds it easier to trust the company, get a loan and handle the repayments. A similar result is achieved by completing the transaction in stages: selling a part first and the rest later.

Generally, loan repayment periods are less than five years. The company's result must be able to repay the loan with interest in full to the financier within this time. Banks and financial institutions have financing packages tailored specially or acquisition, which may include, in addition to a standard loan, forms of financing such as leasing.

Sometimes an investor also joins. For example Sitra (The Finnish Innovation Fund),  has also included private equity in its functions. Other private equity investors can be found through investor associations (for example FiBAN) or through banks. A private equity investor brings their own money into a business acquisition, thus facilitating easier access to loan money and is in a way one buyer among others. They are especially useful when the acquisition can't succeed because there are not enough countersecurity.

Access to finance is usually interrupted by the failure to provide adequate countersecurity. In this case, the requested purchase price may also be too high. The higher the price of a company in relation to its profitability and wealth, the more diverse financing solutions are needed. It is therefore easy for the seller to check the accuracy of the price he is going to ask for the business by asking the financiers' willingness to finance the transaction at the thought price. If this is not done by the seller, it will be done in due course by the buyer.

When the transaction is carried out as a so-called sale of business (liiketoimintakauppa), financing is usually easier to get than if it were carried out, for example, as a sale of shares (osakekauppa). The machinery and equipment for sale are only eligible as collateral for the loan in a sale of business. This is not the case in sale of shares, as it is prohibited by law.

Finnvera has an SME Guarantee for growth-oriented SMEs, which allows a company to apply for a loan from a bank for working capital, investment and product development needs. Finnvera’s SME Guarantee does not require a countersecurity and guarantees 80 percent of the company's bank loan. Your bank files an application on your behalf.