Raising debt capital and equity capital for an acquisition in Australia

January 05, 2023

by a searcher from Curtin University of Technology in Perth WA, Australia

Included in this post:
1) Making comment about raising debt capital and equity capital in Australia versus the US.
2) Seeking advice for raising debt capital and equity capital in Australia.

1)
In my observation there are two distinguishing characteristics of the US market, which make buying good sized ($500K-$2M EBITDA) businesses, by individuals, in the US, easier than in Australia:
i) SBA financing (bank finance backed by the Small Business Administration - Federal Govt)
ii) Vendor finance (Seller Notes) as a norm and accepted practice in the business sales environment (a majority of US deals have some percentage of the purchase price as a seller note, whereas in Australia only a minor fraction include vendor financing)

The two items above relate to debt capital.

In respect of equity capital (investment) there is a far larger community of searchers / search funds and investors, however I am not sure if this translates to an easier ability to get investors on board. Perhaps the ratio of searchers to investors is better in Australia and therefore less competition for funding?

2)
Debt capital
i) I am interested to know if anybody has had any experience with a bank or non-bank financial institutions in Australia, who are willing to fund a significant portion of the purchase price of a business (say >50%), based on the fundamentals of the business (ie does not require collateral to secure the loan against).
ii) I am interested to know if anybody has had experience with vendor finance in Australia and / or could recommend a legal firm who is experienced with drafting these agreements. In the instance of proprietary outreach or any conversation with a seller, it would be helpful to have an example of a vendor finance agreement to clarify how it works.

Equity Capital
Lastly I am interested to know more about the investment (VC) community in Australia, particularly for purchasing cashflow generating businesses. Any information would be much appreciated.

Many thanks..