How to Write a Business Plan for an Acquisition

An acquisition business plan is the document you will lean on at three points in the deal. First, when a lender or investor decides whether to back you. Second, when you set your maximum price during negotiations. Third, after completion, when the plan becomes your operating roadmap.

Buyers who skip it tend to overpay, run out of working capital in the first six months, or drift once the keys are theirs. A good plan forces you to answer the hard questions before anyone asks them: what are you buying, what will you pay, how will you fund it, and what will you change in the first year.

A startup plan persuades people that an idea will work. An acquisition plan persuades them that you can run something that already works. That changes the content in three ways.

• The market analysis starts from the target business's existing customers and revenue, not a projected market size
• Financials are built on the seller's verified trading history, adjusted for your ownership, not a bottom-up forecast from zero
• Risk sections focus on transition and dependency risks (customer concentration, staff retention, supplier contracts) rather than product-market fit

The discipline is the same, but the evidence base is stronger: you are writing about a business with filed accounts, not a hypothesis. Use that.

The executive summary is one to two pages and states the deal in plain terms: the business (or the type of business) you intend to buy, the asking or expected price, your funding structure, your reason for buying, and the headline numbers an underwriter needs. It is the only page some readers will see, so it must stand alone.

• Who you are and what relevant experience you bring
• The target: sector, location, turnover, adjusted net profit
• Deal structure: share or asset purchase, headline price, working capital assumption
• Funding: your equity contribution, lender amount, any seller finance
• The one-sentence case: why this business, why you, why now

If you have already identified a business, profile it honestly: trading history, customer mix, staff, premises, and anything that depends on the current owner. If you are still searching, define acquisition criteria instead, so the plan survives contact with the market.

• Sector and sub-sector, plus any sectors you explicitly exclude
• Region and whether relocation is on the table
• Turnover and adjusted profit range you can sensibly fund
• Deal-breakers: customer concentration above a set level, leases under five years, heavy owner dependence

Then set out the market context: who the customers are, how the sector is trending in the UK, who the competitors are, and what would have to go wrong for revenue to fall. Lenders read this section to test whether you understand the business you are borrowing against.

This is the section lenders scrutinise, and the one where acquisition plans differ most from startup plans. Start from the target's actual accounts, then adjust.

1. Take three years of filed accounts plus current-year management accounts
2. Normalise earnings: add back one-off costs, charge a market salary for any owner role you will replace or take on yourself
3. State your purchase price and how it compares to the normalised earnings (the implied multiple)
4. Build a 12-month post-completion cash flow forecast, month by month, including debt repayments, your own salary and a working capital buffer
5. Show a downside case: what happens to cash if revenue falls 10 to 15%

Keep the assumptions visible. Every adjustment to the seller's numbers should have a one-line justification an accountant can check. Unexplained add-backs are the fastest way to lose credibility with a lender.

Set out the full funding stack and what each provider gets. A typical UK SME acquisition blends personal equity (20 to 40% of the price), a commercial loan, and sometimes seller deferred consideration over two to three years.

• Your equity: how much, where it comes from, and proof it exists
• Bank or specialist lender: amount, security offered (often the business assets and sometimes your home), and repayment terms
• Seller finance: deferred amounts, payment schedule and what happens if performance dips
• Personal guarantees: which directors are signing them and the exposure involved
• Costs: legal, accounting, valuation and broker fees, typically 2 to 4% of deal value, plus stamp duty on property where relevant

The plan should show total debt service as a percentage of normalised cash flow. Most UK lenders want to see comfortable headroom, not a structure that only works in a good year.

Your plan makes assumptions. Due diligence is how you verify them before the money moves. State in the plan what you will check, and what happens to the deal if the checks fail.

• Financial: VAT returns, PAYE, debtor ageing and bank statements against declared revenue
• Commercial: top ten customers by revenue, contract terms and renewal dates
• Legal: litigation, leases, employment contracts and TUPE obligations
• Operational: key supplier agreements, equipment condition, licences and registrations
• Conditions precedent: what must be true at completion (landlord consent, contract novation, staff retention) before you commit

Lenders and serious sellers both want to see that you have thought beyond completion day. A short operating plan for the first 100 days shows the business will be steady while you learn it.

1. Days 1 to 30: meet every member of staff and every major customer; change nothing yet
2. Days 1 to 30: take control of the banking, payroll, VAT and supplier payments
3. Days 31 to 60: review pricing, supplier terms and any contracts priced below market
4. Days 31 to 60: agree a handover schedule with the seller and begin it
5. Days 61 to 100: set your year-one targets with the team and start the first improvement project

Keep changes in the first quarter small and reversible. The value you paid for sits in the existing customer relationships and team; protect those before you optimise anything.

• Building the financial section on the seller's add-backs without verification
• Leaving working capital out of the funding ask entirely
• Writing a plan that only works if revenue grows
• Skipping the downside case because it is uncomfortable to write
• Assuming the owner will stay and help indefinitely without agreeing terms
• Treating the plan as a one-off document rather than a live roadmap you revisit after completion

Once the plan exists, use it. Revisit it monthly for the first year and compare actuals to your forecast. The gap between the two is the most useful management information you will get.