Financing the acquisition of a Swiss business
How Swiss succession purchases are usually funded, what banks look at, and how buyers assemble equity, debt and vendor support.
6 min
Funding is almost always a mix
Very few succession purchases are paid in cash at closing from a single source. A typical package combines the buyer's own equity, a bank facility, and some form of seller participation such as a vendor loan or deferred instalments.
The proportions depend on how predictable the earnings are. A firm with contracted recurring revenue supports more debt than one whose income depends on winning new projects each year.
What a Swiss lender examines
Lenders concentrate on the cash flow available to service debt after the transaction, the buyer's equity contribution, the credibility of the handover plan, and the concentration of the client base. They will look at three years of accounts and at the normalisation adjustments behind the earnings figure.
They also assess the buyer: sector experience, management track record, and whether the incoming owner can run the business without the seller. A weak answer here is a common reason for a decline even when the target itself is sound.
Vendor financing and earn-outs
A vendor loan lets the seller carry part of the price, repaid from the business over an agreed period, usually subordinated to bank debt. An earn-out ties part of the consideration to results after closing, most often revenue retention or EBITDA over one to three years.
Both instruments allocate risk rather than reduce it. Earn-outs in particular need precise definitions — of the metric, the accounting treatment, and the buyer's freedom to change the business during the period — or they become the source of the dispute they were meant to avoid.
Guarantees and support schemes
Switzerland has a system of recognised guarantee cooperatives that can guarantee part of a bank loan to a small business, within limits set by federal law and the cooperative's own criteria. Some cantons operate their own economic-development instruments as well.
Availability, ceilings and conditions change over time and vary by canton, so check the current terms directly with the relevant institution or your bank rather than relying on general summaries.
Build the funding case before you bid
Sellers weigh certainty as heavily as price. A buyer who arrives with an indicative bank position, a clear equity contribution and a realistic timetable is credible in a way a higher unfunded offer is not.
Preparing that case early also protects the buyer: a financing structure worked out under deadline pressure is where covenants get accepted that constrain the business for years.
General information for orientation only. It is not tax, legal or financial advice; obtain qualified Swiss advice for your situation.