What Information Does a Lender Need About an Accounting Practice Acquisition?
Updated: Oct 24
A lender needs a coherent picture of what you are buying, who will operate it, how the purchase will be funded and where the loan repayments will come from.
An accounting practice acquisition application brings those answers together. The sale brochure may explain the opportunity, but formal assessment needs evidence connecting the proposed transaction to your finances and operating plan.
For an Australian buyer, Stage 6 is where earlier conversations become a specific funding request. The application should reflect the latest commercial terms and material due-diligence findings, including matters still being investigated.
A polished presentation cannot resolve a gap in the underlying information.
Your accounting practice acquisition: the short answer
Explain the purchase structure, price, payment arrangements and relevant deadlines.
Provide evidence of the practice’s historical and current financial performance.
Describe your experience, financial position and intended operating model.
Reconcile the total funding requirement with your contribution and other funding sources.
Show how forecast cash flow supports the proposed repayments and identify unresolved risks.
Start with the transaction you actually intend to complete
A lender should be able to tell whether you are buying business assets, a fee book, shares or another ownership interest. Those descriptions matter because they help explain what transfers, which entity will receive the income and what obligations sit alongside the purchase.
Your solicitor and tax adviser can help clarify the structure. The finance submission should then use consistent names for the purchaser, borrower, vendor and relevant entities.
If a new company or trust is involved, its role should be clear rather than left for the lender to infer.
The current sale agreement or other available transaction documents should show the price, deposit, settlement payment and any deferred consideration. Vendor finance, retention adjustments and payments linked to future outcomes need explanation too.
A price quoted in an early email may no longer describe the deal being assessed.
What evidence supports the practice’s earnings?
Presenting figures is not the same as demonstrating repayment capacity. Financial statements, current management information, projections and transaction documents may help explain the position. The required package depends on the proposed facility and circumstances.
For a practice acquisition, the financial picture should connect the historical accounts with what is happening now. If the latest completed year looks strong but current billings have softened, your application needs to explain the change.
Equally, a recent improvement deserves supporting evidence rather than a simple annualised estimate.
Adjusted earnings need a transparent bridge from reported results.
For example, adding back the vendor’s remuneration raises a practical question: who will do that work under your ownership, and at what cost? Your experience may make part of the transition possible, but the forecast still needs to recognise your workload and income requirements.
Explain what keeps the fees coming in
An accounting practice is built around work that clients continue to entrust to people. Financial statements provide an important view of the past, while information about the client base, team and handover helps explain the proposed future.
Your submission can describe service lines, billing patterns, major client groups and relationships that depend heavily on the vendor. Where due diligence has identified concentration or retention concerns, the useful response is an evidence-supported explanation of the exposure and the transition measures you propose.
For instance, a large client relationship may be managed personally by the selling principal. A documented introduction process and agreed vendor availability can help explain continuity, although neither guarantees that the client will remain.
Avoid describing annual compliance fees as contractually secured income unless the relevant arrangements support that description.
The buyer is part of the credit picture
The practice’s track record belongs to its existing operation.
A lender also needs to understand the person or firm taking control. Your qualifications, relevant experience, management responsibilities and familiarity with the services being acquired help explain how the ownership plan will work.
A first-time owner may have substantial technical experience but need support with staff management or business administration. An established firm may bring those capabilities, while also carrying existing debt and integration demands. Neither situation can be understood properly through the practice’s sale figures alone.
Your personal or group financial position also forms part of the application where requested. Be clear about existing commitments, available cash and any proposed guarantors or security providers.
An asset listed on a statement of position is not necessarily accessible cash for settlement.
Match the funding request to the whole acquisition
The purchase price is one part of the funding requirement. Professional fees, settlement adjustments, working capital and transition expenditure can also consume cash.
You should be able to explain which amounts are due at settlement, which arise later and how they will be funded.
A sources-and-uses schedule makes the relationship visible: total expenditure on one side, and your contribution, requested facilities and any other funding on the other. Deferred vendor payments should appear with their timing and terms. They do not remove the need to consider how future cash flow will meet them.
For an illustrative comparison, two buyers may both request $700,000 towards the same purchase price. One buyer retains a separate cash reserve, while the other uses all available savings at settlement.
Their initial loan requests match, but their capacity to manage the first payroll or delayed client receipts differs.
Show how the practice will operate after settlement
business.gov.au’s loan-application guidance recommends understanding income, expenses, debts and cash flow, and preparing relevant forecasts and a current business plan. For this acquisition, those documents should describe your intended operation rather than simply reproduce the vendor’s results.
A realistic forecast allows for staffing, rent, software, tax payments, working capital and proposed debt repayments. It should also explain how client receipts are timed. Profit recorded in a busy compliance period may not arrive in the bank before the practice’s bills fall due.
Keep expected improvements separate from the established operating base. If you anticipate higher fees or integration savings, explain when they could occur, their implementation cost and the evidence behind them.
A downside scenario can show what happens if the transition takes longer or collections are slower than expected.
What should be clear before submission?
Before your acquisition finance adviser submits the proposal, it helps to resolve inconsistent figures and label outstanding information. If a material due-diligence question remains open, explain its possible effect and when an answer is expected.
Concealing uncertainty in a confident forecast makes the application harder to assess.
You can also ask which documents are required now, which may follow and whether the finance timetable remains compatible with the purchase deadlines. Although submission starts formal assessment, it does not create approval or extend a contractual date.
Your solicitor should explain the transaction’s conditions and notice requirements.
Frequently asked questions
Is the Information Memorandum enough for a lender?
It can introduce the opportunity, but supporting records, current transaction terms and buyer information may be required. Sale information should be checked against the evidence used in the application.
Do all lenders ask for the same information?
No. Requirements depend on the lender, facility, borrower and transaction. Ask your acquisition finance adviser to confirm the package needed for the proposed application rather than relying on a generic checklist.
Can the application proceed while due diligence continues?
It may, depending on the circumstances. Outstanding matters should be disclosed clearly, and material findings must flow into updated figures and terms. Parallel work does not make an unresolved issue disappear.
Does a complete application guarantee approval?
No. A complete package enables the lender to assess the proposal, but the lender makes its own credit decision. Any approval may also have conditions to satisfy before funds become available for settlement.
A clear application connects the evidence
The strongest preparation brings the records, buyer position and purchase terms into the same current picture. You should be able to explain both the attraction of the practice and the practical demands of owning it. Keep your acquisition finance adviser informed as those details change so the lender assesses the acquisition you intend to complete.
Considering Buying an Accounting Practice?
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General information only. This article does not constitute financial, credit, legal, tax, accounting, compliance or valuation advice. Finance is subject to lender approval, eligibility criteria, terms, fees and conditions. Consider obtaining independent professional advice for your circumstances before acting.
