Acquiring a business with no down payment: myth or reality in Switzerland?

The myth of "no down payment": what it really means

Acquiring a business without personal capital is a widely held fantasy. But what does "no down payment" really mean?

In reality, it assumes 100% external financing of the acquisition price. In Switzerland, banks generally require between 20% and 30% equity to grant an acquisition loan. Full financing by a third party remains extremely rare and reserved for very specific situations.

Important: "no cash contribution" never means "no guarantees" or "no risk". Personal commitments remain present, even in the most creative arrangements.

The exceptional cases where acquisition with no down payment is possible

100% financing of a business acquisition exists, but in very particular contexts.

These situations generally involve an exceptional relationship of trust between seller and buyer, or a deferred compensation model based on future performance. Two scenarios stand out in Switzerland.

Full vendor credit

100% vendor credit means that the seller finances the entire sale price. The buyer gradually repays with the revenue generated by the business.

This model requires absolute trust between the parties and a highly profitable business with stable cash flow. It is mainly found in family successions or internal transfers.

Major risks: the seller remains financially exposed, and the buyer must maintain performance immediately.

Management buy-out (MBO) with earn-out

In an MBO, an executive manager acquires the business they already manage. Payment is spread out and conditional on future performance (earn-out).

The seller often temporarily retains shares, thus sharing the risk. This formula is more common than full vendor credit because the buyer knows the business perfectly.

Key advantage: operational continuity reassures all stakeholders, including banks and clients.

Realistic alternatives to "no down payment"

Rather than seeking 100% financing, it is better to explore hybrid financial arrangements that significantly reduce the necessary personal contribution.

These structures combine several sources of financing and allow you to acquire a business with limited capital, whilst remaining credible with banks and sellers.

Partial vendor credit (30-50%)

The most common model in Switzerland: combining bank financing and partial vendor credit.

Concrete example: acquisition at CHF 500,000 with 20% personal contribution (CHF 100,000), 40% bank credit (CHF 200,000) and 40% vendor credit (CHF 200,000).

This arrangement reassures the bank (the seller retains an interest in success), reduces the necessary cash contribution, and facilitates the transition. Discover how to structure this type of transaction in our guide on the 8 steps to a successful acquisition.

Performance-based financing (earn-out)

The earn-out allows you to pay part of the price based on the business's future results. This formula drastically reduces the need for immediate liquidity.

Essential condition: define clear and measurable KPIs (turnover, EBITDA, number of clients) in a solid contractual agreement.

To understand how to properly value the business and structure these clauses, consult our article on business valuation in Switzerland.

Contribution of skills and progressive acquisition

Hybrid model particularly suited to young entrepreneurs: entering as a minority partner by contributing skills rather than capital, then progressively buying back shares.

This approach values sector expertise, commercial network or technical skills. The buyback is spread over 3 to 7 years depending on performance.

Explore businesses for sale on Leez to identify opportunities open to this type of arrangement.

What Swiss banks actually require

Understanding banking expectations is essential for building a solid case, even with limited capital.

Swiss banks evaluate each acquisition financing request according to precise criteria that go well beyond simple capital contribution. Two elements are particularly scrutinised.

Banks' evaluation criteria

Banks systematically analyse:

• Equity: 20-30% minimum of the acquisition price
• Sector experience: credibility of the buyer in the field
• Business plan: realistic and documented projections
• Financial history: profitability and stability of the target business
• Guarantees: personal and tangible to secure the loan

A solid case partially compensates for limited capital.

Unavoidable personal guarantees

Even with generous vendor credit, banks and often sellers require guarantees: mortgages on property, pledging of assets, personal sureties.

Buying a business without cash contribution never means buying without personal commitment. Financial risk remains present, simply deferred or structured differently.

This reality must be integrated from the start of your reflection on acquiring a business.

Building your case when you have little capital

With limited capital, the quality of the case and the buyer's profile become decisive.

Three levers allow you to compensate for a lack of capital and maximise your chances of convincing sellers and financiers.

Highlighting your experience and network

Emphasise your sector expertise, your address book, your skills complementary to the targeted business. Prepare a detailed entrepreneurial CV.

Document your past successes, your certifications, your relationships with suppliers and potential clients. When capital is lacking, personal credibility becomes your main asset.

Sellers often seek a competent successor as much as a wealthy buyer.

Targeting the right opportunities

Favour SMEs with stable and predictable cash flow, family successions where the relationship takes precedence over price, and service businesses (fewer heavy assets to finance).

Avoid businesses requiring significant immediate investments or in financial difficulty. Use the search filters on Leez to identify opportunities compatible with your financial profile.

Surrounding yourself with the right experts

A complex financial arrangement requires specialised skills: M&A lawyer to secure contracts, accountant or fiduciary to structure financing, and possibly a specialised broker.

These professionals know creative arrangements and can unlock seemingly impossible situations. The Leez partner network brings together experts familiar with these issues of acquisition with limited capital.

The investment in this advice quickly pays for itself.

Acquiring a business without personal capital remains exceptional in Switzerland. Banks generally require minimum equity of 20 to 30%, as well as solid personal guarantees. The real challenge is not to buy with nothing, but to intelligently structure your financing.

Hybrid solutions offer realistic alternatives: partial vendor credit, performance-based earn-out, or progressive acquisition with capital increase. These arrangements reduce the initial contribution whilst reassuring the seller and financiers. Your sector experience, your professional network and the quality of your case weigh as much as your capital.

The key to success? Target the right opportunities, highlight your skills and surround yourself with experts who know the Swiss market. Discover businesses for sale on Leez and identify those that match your profile. Our partner network can support you in the financial structuring of your acquisition project.