Financing a business acquisition and vendor financing

Few people buy a business with their own money alone. A typical acquisition is financed with a mix of the buyer’s equity, a bank loan — possibly backed by a guarantee from EIFO, the Danish state’s export and investment fund — and a portion the seller waits for: a vendor loan or an earn-out. How the package is put together decides both whether the deal can happen and how much risk buyer and seller each carry.

This guide walks through the sources of finance one by one, what Danish banks typically focus on, and how sellers can offer vendor financing without taking unnecessary risk. It is written for buyers — including international buyers looking at a Danish business — and for sellers who want to understand what a buyer needs before they can pay.

What a typical financing package looks like

There is no fixed recipe, and the split depends on the type of business, its earnings and the security available. But the layers are almost always the same:

Equity: the buyer’s own stake

The bank and other lenders want to see the buyer put their own money into the deal. Equity is the buffer that takes the first losses, and it shows that the buyer has something at stake. How large a share is required depends on the business and the bank — a business with stable cash flows and good security typically needs less equity than a young digital business where nearly all the value is goodwill.

• Savings and released home equity are the most common sources for private buyers.
• Co-investors — a business angel, a partner or a family office — can contribute capital in return for a stake.
• A holding company is often used as the acquisition vehicle, so the loan and the ownership sit together. EIFO’s guarantee can cover a credit facility in a holding company used for a change of ownership.

Bank loans

The bank is normally the largest lender. It lends based on the business’s ability to pay interest and repayments out of its own earnings — not on the price you pay. So the bank looks at cash flow after a normal owner’s salary and at the security that can be provided.

What the bank looks for

• Accounts for the last three years and figures for the current year.
• A budget and cash-flow forecast for the first years after completion — including interest, repayments and your own salary.
• An explanation of adjustments: what are one-off items, and what are the owner’s private expenses?
• Your background: sector knowledge, management experience and a plan for the first 100 days.
• Security: a floating charge (virksomhedspant), a pledge over the shares, property and possibly a personal guarantee.
• The findings of your due diligence — see the due diligence checklist.
• A draft purchase agreement and letter of intent showing price, structure and conditions.

Make the purchase conditional on financing, so you are not bound to buy if the bank says no. The condition can already be included in the letter of intent, together with any vendor loan or earn-out.

EIFO: the Danish state’s financing fund

EIFO — Danmarks Eksport- og Investeringsfond (the Export and Investment Fund of Denmark) — is the state’s business financing fund. It was formed by merging several bodies, including Vækstfonden and the Danish export credit agency, so if you have heard of «loans from Vækstfonden», EIFO is who you contact today. EIFO does not finance whole deals but supplements the bank when it cannot carry everything alone. Two schemes are particularly relevant for a change of ownership:

EIFO guarantee

With an EIFO guarantee (EIFO-kaution), EIFO guarantees part of the loan to your bank. It is the bank that applies. EIFO can cover up to 80% of the bank’s loss on an individual credit facility, but in total no more than 50% of the bank’s loss on the business unless otherwise agreed. The guarantee can be used for loans in connection with a change of ownership, including in a holding company. Facilities of DKK 2 million or less go through the self-service scheme (Vækstkaution). An annual premium is charged, based on a rating.

Growth loan (Vækstlån)

A growth loan is a direct loan from EIFO to businesses that cannot raise enough capital from their bank. EIFO itself lists changes of ownership and family successions as a purpose, where the loan can help the transfer happen on sound terms. According to EIFO’s product sheet (November 2025):

• Loans from DKK 200,000 — with no fixed upper limit.
• 50% co-financing of the total need is required, for example from the bank, the owner or the seller.
• A term of up to 10 years with 2 years without repayments at the start.
• Interest is typically around 3 percentage points above the bank’s, and an arrangement fee is charged.
• The business must have positive equity, be creditworthy and generally have no more than 499 employees.
• EIFO requires security — such as a floating charge, a pledge over shares and a limited personal guarantee.

Terms change over time, so check them directly with EIFO and ask your bank how EIFO can fit into the package. Banks know the schemes and can often make the contact themselves.

Vendor financing (vendor loan)

With vendor financing the buyer pays part of the price in cash on completion and repays the rest to the seller over an agreed period with interest. The vendor loan (sælgerlån) bridges the gap between what the bank will lend and the price. It is especially common in family successions, sales to employees and smaller deals where bank finance does not stretch far enough.

For the buyer, a vendor loan signals that the seller believes in the business — and for the bank, it means the seller shares the risk. For the seller, it means credit risk: if things go badly for the buyer, you may not get the rest. So the loan must be agreed as carefully as a bank loan.

What the vendor loan should cover

• Amount, interest and term — and whether the rate is fixed or variable.
• Repayment profile: equal instalments, rising instalments or an initial repayment holiday.
• Security: a pledge over the shares or assets, a floating charge or a personal guarantee from the buyer.
• Subordination: The bank often requires the vendor loan to rank behind its own loan. Agree what that means for repayments.
• Default: when the loan falls due and what you can do if instalments are missed.
• Information: the right to see the business’s accounts until the loan is repaid.
• Restrictions: for example no dividends to the buyer until the vendor loan is reduced to a certain level.

Vendor financing and instalments on Sitavo

On Sitavo, vendor financing can be agreed and tracked inside the deal. As a seller you can show in your listing that you are open to vendor financing and propose terms for payment in instalments — such as the share paid upfront, the number of instalments and the interest rate. As a buyer you can split your offer between cash, an earn-out and vendor financing, and make it subject to financing.

• Loan agreement in the deal: Once you agree on the price, you can create a loan agreement. You choose the upfront payment (5–90% of the price), 2–60 monthly or quarterly instalments, a fixed annual interest rate and the first due date. Instalments are calculated as a serial loan — equal repayments plus interest on the outstanding balance — and the figures update as you type.
• Security and collection: You can add retention of title until the loan is repaid (to the extent it can be enforced) and name a debt collection agency the seller can pass a missed instalment to.
• Acceptance: Both parties accept the loan agreement electronically. The acceptance is recorded with a timestamp and a fingerprint (SHA-256) of the exact text, and the agreement is locked as a PDF. If the terms change, both must accept again.
• Payment and follow-up: The payment step in the deal covers the upfront payment. Instalments are tracked in an overview where the buyer records each payment and the seller confirms it, and both receive reminders when a payment falls due.

The loan agreement is a standard agreement under Danish law. It is not signed with MitID and therefore contains no clause allowing direct enforcement, and Sitavo is not a party to it and does not handle the payments — they go directly from buyer to seller. Consider having a lawyer review it, especially for a large loan or if the bank requires the vendor loan to rank behind its own. How the purchase price itself is paid — including via an escrow arrangement — is covered in Paying for a business.

Earn-outs as financing

An earn-out is not a loan but a contingent part of the price, paid only if the business hits certain targets after the sale. It reduces the amount the buyer must finance on day one and shifts part of the risk to the seller. In return it requires precise definitions. Read the full guide to earn-outs.

Special routes: family and employees

In a family succession, a combination of a gift, an interest-free demand promissory note and a vendor loan is common. In a sale to an employee-owned vehicle — possible since 1 January 2026 — the price can be paid over time out of the company’s future profits, and the seller is not taxed on the gain at the time of transfer. Both are covered in our guide to business succession.

From interest to financing, step by step

1. Know your own number. How much equity can you put in, and how much risk will you take?
2. Find the business. Browse businesses for sale, and use the checklist before you buy.
3. Get the figures and assess the price. Normalise earnings and compare the price with a valuation.
4. Talk to the bank early — before you make a binding offer — and ask about an EIFO guarantee or growth loan.
5. Negotiate the structure with the seller: cash, vendor loan and any earn-out. Set out the split and the financing condition directly in your offer, and include it in the letter of intent if you use one.
6. Complete due diligence, and share the results with the bank.
7. Sign the purchase agreement once financing is confirmed — see the asset purchase agreement or share purchase agreement.

If you are selling, consider already in your sales material whether you are open to vendor financing or an earn-out — it widens the pool of possible buyers. See the chapter on finding the right buyer, how to put your business up for sale, and find a Sitavo adviser — such as an accountant or lawyer — if you want help structuring the deal. You can invite the adviser into the deal with exactly the access you choose.