There is no universally best way to finance an acquisition. The right mix depends on the buyer’s strategy, balance-sheet strength, cost of capital, risk tolerance and expected returns—and on how much cash the business needs to keep after closing.
This guide is for owners and finance leaders of Irish businesses considering an acquisition. Its source for the financing trade-offs is an Irish Examiner special report that was labelled an advertising feature, published on 2 October 2026. The views below are attributed to its named contributors; they are not lender offers or transaction-specific advice.
Start with the deal and the cash the business must keep
Before choosing a source of funds, define what the acquisition is meant to achieve and what capital the transaction requires. Then assess whether the target’s cash flows and the combined business can support the proposed funding, including if performance is weaker than expected.
Set a minimum for the liquidity and working capital the buyer will need after closing. Integration costs, continued operations and unexpected demands on cash do not disappear when the purchase price is paid. A structure that finances the acquisition but leaves too little cash to run the combined business may undermine the deal.
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Stephen Kane, head of corporate advisory at Goodbody, put the strategic test this way: “Acquisitions should be an extension of strategy, not a substitute for one.”
Compare the main funding routes
The Irish Examiner feature describes several sources that can be used alone or combined. Each shifts the balance among cash needs, repayment risk, ownership and control.
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| Funding route | Potential benefit | Trade-off or risk |
|---|---|---|
| Balance-sheet cash | Can provide speed and certainty, retain ownership control and avoid the execution risk of arranging new financing. | Uses liquidity that could support operations, resilience or another investment. Consider the return the business gives up by spending the cash. |
| Traditional bank debt | Can fund a purchase without diluting equity and may suit an established business with predictable cash flows. | Repayments and covenants can limit flexibility. Leverage increases exposure if performance falls short; refinancing risk also matters. |
| Alternative lending | The feature says alternative lenders may offer more flexible repayment structures than banks. | It describes this borrowing as more expensive than bank lending. Availability and terms are lender-specific; the feature provides no quotes. |
| Buyer shares or share consideration | Can reduce the cash paid at closing and give the seller a stake in the combined business’s future growth. | Existing shareholders share ownership. The economics depend on negotiated valuation and terms, which the feature does not quantify. |
| Private equity or other third-party equity | Adds capital for an acquisition without increasing leverage and may support a larger transaction. | Dilutes ownership and can bring investor governance requirements and involvement in strategic decisions. |
| Vendor financing | The seller accepts payment over time, reducing the buyer’s immediate funding requirement; the feature says it may signal seller confidence. | Leaves a future payment obligation and ongoing financial exposure between buyer and seller. |
| Earn-out | Can bridge a valuation gap by making some payment depend on future performance, reducing the upfront capital needed. | Vague or poorly designed measures and terms can cause disputes or misalign the parties’ incentives after closing. |
| Invoice finance or asset-based funding | The feature says eligible receivables may support a facility as part of a wider package, potentially preserving liquidity. | Eligibility and facility terms are not stated; not every sales ledger will qualify, and funding is not assured. |
| Blended funding | Combines sources—such as debt, equity, asset-based lending or invoice finance—to tailor the package and ease cash-flow pressure. | Requires coordination of repayment schedules, covenants, control, timing and liquidity across instruments. The feature gives no worked or quantified comparison. |
Test the full terms, not just the headline amount
A loan’s interest rate or the cash needed at closing does not tell the whole story. Compare complete financing terms against the acquisition plan and the buyer’s capacity to absorb a downside case.
- Total cost: Compare interest, fees and other financing costs. The feature supplies no comparable quotes or rates.
- Repayment capacity: Check the timing and size of obligations against likely cash flows, including a weaker-than-expected outcome.
- Security and covenants: Understand what assets secure borrowing, which financial or operational limits apply, and how those terms could affect future decisions.
- Refinancing exposure: Consider when debt falls due and whether the business could manage if refinancing is unavailable or less favourable.
- Ownership and decision rights: Assess the dilution, governance and control implications of selling shares or accepting outside equity.
- Liquidity after closing: Allow for working capital, integration and ordinary operations before committing available cash.
- Strategic fit: Compare the cost and constraints of each structure with the expected return and purpose of the acquisition.
These are comparison criteria, not a formula that produces one answer. The feature gives no modelled cases or transaction-specific terms.
When a blended structure may fit
Blending can help when no single source meets the buyer’s needs—for example, when using all available cash would leave too little liquidity, but borrowing the full amount would create excessive repayment pressure. A package might combine debt with equity or a seller-funded element; eligible receivables could also be considered as part of a wider funding arrangement.
Ala Browne, sales lead at Bibby Financial Services, said: “Increasingly, transactions are being supported by blended funding structures combining traditional debt, equity, asset-based lending and invoice finance rather than relying on a single source of capital.” That is a statement in the advertising feature, not evidence that a particular package is available or suitable for every buyer.
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Blending does not remove trade-offs. The buyer still needs to coordinate payment timing, covenants, ownership rights and the liquidity left for the business. The feature offers no standard mix or quantified example.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Plan seller-funded payments carefully
Vendor finance and earn-outs can both reduce the amount the buyer must fund at closing, but they work differently. Vendor finance leaves a payment obligation to the seller. An earn-out makes some consideration contingent on future results, which can help bridge a gap in the parties’ valuation expectations.
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For an earn-out, the parties need clear, workable performance measures and terms. If the measure is ambiguous or the buyer’s post-close strategy affects the result, disagreements may follow. The feature identifies dispute and misalignment risks but does not set out legal drafting terms. Have Irish legal and tax advisers assess the specific transaction.
Use advisers for the questions the feature cannot answer
The feature says interest deductibility can make bank debt tax-efficient, but that general statement does not establish the tax treatment of a particular Irish acquisition. Tax consequences depend on the transaction and its facts; get qualified Irish tax advice rather than treating a broad claim as a calculation.
Corporate finance and debt advisory are relevant service categories when comparing acquisition structures. KPMG Ireland describes corporate finance services for buyers, sellers, borrowers, lenders and financial investors, including M&A and debt advisory (KPMG Ireland corporate finance). Its fundraising page describes advice on debt, mezzanine and equity sources from assessment through execution (KPMG Ireland business fundraising). These service descriptions do not validate any particular funding mix or offer.
What the reported acquisition-interest figure does—and does not—show
The Irish Examiner feature reports that 34% of Irish businesses plan to explore a merger or acquisition transaction in 2026, citing Bibby Financial Services’ SME Confidence Tracker. It also reports that a further 14% were considering a full sale. The feature’s indexed text does not give the tracker’s sample size or methodology, and the underlying tracker has not been independently established here; treat both figures as reported by the feature, not as independently verified measures of all Irish businesses.
Colm Sheehan, a partner in Crowe’s corporate finance department, said: “Acquisitions can support growth more quickly than building new operations from the ground up but choosing the right funding structure is just as important as choosing the right target,”
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