When acquiring a business, the ability to secure business acquisition funding without giving up equity is a key challenge for many entrepreneurs. However, the right financing strategy allows you to close deals, scale operations, and maximize profits—all while retaining full ownership. Therefore, many business buyers mistakenly offer equity in exchange for capital, but with the right approach, you can structure creative financing solutions that keep you in control.
In this guide, we’ll explore smart funding options that allow you to close deals without sacrificing equity, using a pest control business acquisition as a case study.
The Case Study: Buying a Pest Control Business
Let’s examine a real-world example:
A buyer is acquiring a pest control company with the following financials:
- Revenue: $400,000
- EBITDA (Profit): $130,000–$140,000
- Purchase Price: $450,000
- Agreed Terms:
- $100,000 down payment
- $75,000 in annual payments over 3–4 years
- $50,000 interest payment in the fifth year
The buyer needs $50,000 for half of the down payment. Rather than offering equity to an investor, they are exploring alternative funding strategies to keep full ownership.
Smart Ways to Secure Business Acquisition Funding Without Equity
1. Negotiate Better Seller Financing Terms
In many cases, sellers are willing to finance a portion of the deal—especially in industries like home services. Here’s how to negotiate:
✅ Propose a full-price offer with interest-free payments.
- The buyer in this case could say:
“I’m offering you the full $450,000 you’re asking for. In exchange, I’d like to structure this as an interest-free deal. Otherwise, we’ll need to renegotiate the purchase price.”
✅ Request a higher seller-financed portion.
- Instead of a $100,000 down payment, the buyer could ask for $50,000 upfront and the remaining $400,000 paid over time.
- This reduces the need for outside funding while keeping the seller invested in the business’s success.
✅ Add performance-based earnouts.
- Earnouts tie part of the purchase price to future business performance, reducing upfront costs.
2. Use Revenue-Based Financing
Since the pest control business is generating $400,000 in revenue, revenue-based financing (RBF) is a solid option. RBF allows you to borrow against future revenue without giving up equity.
How it works:
- A lender provides a lump sum (e.g., $50,000)
- You repay as a percentage of monthly revenue
- Payments adjust based on business performance
This approach ensures flexible repayment terms while avoiding fixed debt obligations.
3. Leverage SBA Loans and Alternative Lenders
For acquisitions under $5 million, the Small Business Administration (SBA) offers low-interest, long-term loans.
✔ SBA 7(a) Loans: Ideal for business acquisitions, offering up to 90% financing with repayment terms up to 10 years.
✔ Alternative Lenders: Online lenders like OnDeck and Fundbox provide fast access to capital for acquisitions.
💡 Pro Tip: Partner with a local SBA-approved lender to streamline the process.
4. Use Asset-Based Lending
If the pest control company has valuable assets (vehicles, equipment, contracts), the buyer can use asset-based lending (ABL) to secure funding.
Examples of assets to leverage:
✔ Company vehicles and equipment
✔ Recurring service contracts
✔ Accounts receivable (unpaid invoices)
💡 ABL Benefits:
- No personal credit risk
- Loan amount tied to asset value
- Can be combined with seller financing
5. Partner with a Strategic Investor (Without Giving Up Equity)
Rather than offering ownership, consider bringing in an operational partner who contributes capital in exchange for profit-sharing or a fixed return.
🚀 Example:
- The buyer secures $50,000 from a strategic investor.
- Instead of giving equity, they offer profit-sharing for 24 months at a fixed return (e.g., 12%).
- After 24 months, the agreement ends, and full ownership remains intact.
✅ This approach ensures funding while keeping long-term control of the business.
Key Takeaways: Retain Ownership & Fund Smartly
🔹 Negotiate better seller financing terms to lower upfront costs.
🔹 Explore revenue-based financing for flexible repayments.
🔹 Utilize SBA loans and alternative lenders for lower interest rates.
🔹 Leverage asset-based lending to fund acquisitions.
🔹 Partner with investors strategically without giving away equity.
With the right approach, you can secure business acquisition funding without sacrificing ownership. The key is to explore creative financing strategies that align with your long-term goals.
Additional Resources to Secure Business Acquisition Funding:
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