Buying a company: €450k with a bank, €1.29M without

Published: 26 August 2026 · 24 min readFinancingSuccessionRhein-Main

Buying a company: €450k with a bank, €1.29M without

A buyer with around €400,000 of equity wants to take over three owner-run businesses in Hessen, each for about €350,000 on €100,000 of annual earnings. With a bank behind the plan, the three cost €450,000 of his own money. Without one, they cost €1,290,000. The €840,000 in between is the price of never opening a credit file, and it decides whether one purchase becomes a programme.

Nothing here is legal or tax advice. Your Steuerberater and Anwalt decide before anything binds.

The decision

With around €400,000 and no debt, you buy one business and stop. With debt, you buy three and own eight after ten years. The order we would set for this buyer: negotiate the seller loan first, because each percentage point on a €350,000 business replaces exactly €3,500 of his own money. Then apply for the Bürgschaft ohne Bank at Bürgschaftsbank Hessen, the regional guarantee bank, because it reverses the usual sequence and the buyer walks into a bank holding a guarantee commitment instead of a request. Then the KfW ERP-Förderkredit KMU (365/366) through that Hausbank, the company's main relationship bank, which is the only channel through which state loans reach a borrower. The better-known programme 077 admits natural persons only, so a GmbH buyer is excluded from it. If Bürgschaftsbank Hessen reads its €650,000 ceiling as a cap on all external debt and places a young buyer in the €450,000 tier, this structure carries businesses up to about €600,000 of price, and the arithmetic changes above that.

Eighteen routes, ranked

The planning model behind the number in the title combines three deal shapes, three levels of borrowing and two cash policies, which makes eighteen routes. The shapes: one small business earning €120,000 at 3.75 times (€450,000), one larger business earning €220,000 at 4.5 times (€990,000), or three small businesses earning €100,000 each at 3.5 times (€350,000 each). Earnings throughout means normalised EBITDA, the profit before interest, tax and depreciation after a manager is paid the market rate, so every business runs without the buyer.

The borrowing levels: no debt, a seller loan of 30% of the price only, or the full stack of 20% equity, 30% seller loan and up to 50% bank debt behind a guarantee. The cash policies: delever first (every spare euro repays debt, the next purchase waits for zero debt and a €100,000 reserve) or grow first (contractual repayments only, the next business is bought as soon as it is affordable above a €40,000 reserve). Each route gets the least capital that actually buys its year-one ambition: price plus 5% Kaufnebenkosten (the German transaction costs of notary, lawyers and checking the books), a €25,000 integration budget and €20,000 of working capital per business, less the seller loan and the bank loan, plus a €50,000 reserve. After that every route keeps buying whenever it can afford to, up to eight businesses and two purchases a year, over ten years.

Rank Shape Borrowing Cash policy Capital Owned yr 10 Value yr 10 Multiple Per year
1 Three small Full stack Grow first €450,000 8 €3,639,005 8.09x 23.2%
2 Three small Full stack Delever first €450,000 6 €2,672,866 5.94x 19.5%
3 One large Full stack Grow first €345,000 2 €1,882,845 5.46x 18.5%
4 One large Full stack Delever first €345,000 1 €1,773,921 5.14x 17.8%
5 Three small Seller loan Grow first €975,000 8 €4,541,329 4.66x 16.6%
6 One small Full stack Delever first €210,000 1 €881,072 4.20x 15.4%
7 One small Full stack Grow first €210,000 1 €868,736 4.14x 15.3%
8 Three small Seller loan Delever first €975,000 7 €3,997,994 4.10x 15.2%
9 and 10 Three small No debt either €1,290,000 8 €4,979,868 3.86x 14.5%
11 One large Seller loan Grow first €840,000 2 €2,605,212 3.10x 12.0%
12 One large Seller loan Delever first €840,000 1 €2,463,880 2.93x 11.4%
13 One small Seller loan Grow first €435,000 2 €1,263,363 2.90x 11.3%
14 One small Seller loan Delever first €435,000 1 €1,206,430 2.77x 10.7%
15 One large No debt Grow first €1,135,000 2 €2,999,356 2.64x 10.2%
16 One small No debt Grow first €570,000 2 €1,443,510 2.53x 9.7%
17 One large No debt Delever first €1,135,000 1 €2,838,631 2.50x 9.6%
18 One small No debt Delever first €570,000 1 €1,378,222 2.42x 9.2%

As of August 2026, Hamnett Enterprises GmbH estimate from our planning model. Value at year 10 is the businesses at the entry multiple plus cash less debt outstanding. No target has been screened, and every earnings figure and multiple is a planning value from sector bands.

Three readings of the table.

The six bank-financed rows all sit in the top seven and are also the six cheapest routes to start, and that holds exactly as far as the guarantee assumptions further down hold.

The no-debt rows come last on the multiple and first on absolute value. Row 9 builds €4,979,868 of value from €1,290,000, row 1 builds €3,639,005 from €450,000. Both end up owning the same eight businesses with the same €1,032,560 of annual earnings. The bank route commits €840,000 less and gives up €1,340,863 of year-ten value, because part of the return goes to the lender.

What is scarce decides. If money is scarce, and €400,000 is near the top of what can safely be committed, the bank route is right, because it reaches the same place on a third of the capital. If opportunity is scarce, because the money exists but there are only so many good businesses and only so much of the buyer's attention, the saved capital has nothing to do, and the no-debt route builds more value with no lender and no personal guarantee. More capital than needed helps on no route: above roughly €300,000 to €450,000, extra money buys nothing on the first route, because two purchases a year and eight businesses set the ceiling.

Why the size of the business does not matter

Debt service coverage is the ratio a bank uses to test a loan: one year's earnings divided by that year's interest and principal. A value of 1.30 means the business earns €1.30 for every €1.00 of debt payments, a 30% cushion. Our own floor is 1.30 in a normal year and 1.00 in a bad one.

Three equations make the ratio predictable. Price equals earnings times the multiple. Debt payments are a fixed share of the price, because every layer of the stack is agreed as a percentage of the price. So coverage equals earnings divided by (earnings times multiple times share), and the earnings cancel. What remains is one divided by (multiple times share). The size of the business no longer appears in the formula.

A worked case on the full stack. The seller loan of 30% of the price runs six years at 5%: 5.0% principal plus 1.5% interest. The bank loan of 50% runs eight years at 7.76%, plus a 1.5% guarantee fee on the 80% guaranteed: 6.25% principal plus 3.88% interest plus 0.6% fee. Together 17.2% of the price in year one, the most expensive year because the balance is highest. At 3.5 times that gives 1 divided by (3.5 times 0.172), which is 1.66. At 4.5 times it gives 1.29, just under the floor. The highest multiple this stack carries at 1.30 is 4.48.

On the €350,000 business it looks like this: €60,200 of debt payments against €100,000 of earnings, so 1.66. A business twice the size costs €700,000, carries €120,400 of payments against €200,000 of earnings, and again reads 1.66. A deal that fails on coverage fails at every size. Looking for a smaller version of the same business does nothing, because the debt shrinks exactly as fast as the earnings. The only two levers are a lower multiple for the same earnings or less debt.

The convention is the strict one: straight-line principal, interest on the opening balance, EBITDA before replacement investment. On a level annuity, meaning equal instalments, the ceiling rises to about 6.35 times, and which convention your Hausbank uses belongs in the first meeting.

The seller loan: €3,500 per percentage point

A Verkäuferdarlehen, a seller loan, is the part of the price the retiring owner leaves in the business and gets back over several years out of its profits. It is standard in German successions, it carries a Rangrücktritt (a subordination clause, so the seller is paid after the bank if things go wrong), and that subordination is exactly what makes it valuable to the bank: from the bank's seat it is nearly equity.

The arithmetic is simple. On a €350,000 business each percentage point of seller loan replaces €3,500 of the buyer's own money, and €10,500 a point across three businesses. The first route in the table needs €450,000 and misses the buyer's €400,000 by €50,000. Moving the seller loan from 30% to 34.5% closes the gap. Negotiating the seller up costs nothing, is available on every deal, and is worth more per hour than any search for capital.

Where the usual band sits depends on the source. A practitioner note from an M&A adviser dated January 2024 puts it at 10% to 20% of the price, three to five years, 3% to 5% interest, and always subordinated to the bank. Our planning band is 20% to 50%, with 30% as the base, six years and 5%. The 5% is our assumption, since no public index exists. A seller loan at the top of the band on every deal would be a corner rather than a plan, which is why the model uses 30%.

Why sellers agree sits in the succession numbers: KfW Research counts around 109,000 planned handovers and around 114,000 planned closures a year through 2029, against an average asking price of €499,000 (as of 9 January 2026). An owner with that expectation and no buyer in sight has a reason to finance part of the price himself.

The instruments in Germany and Hessen, as of 25 August 2026

Every figure in this table was read today on the issuing institution's own page. Rates move monthly, so pull them again before any commitment.

Instrument Amount and limit Who applies The condition that binds first
KfW ERP-Förderkredit Gründung und Nachfolge (077) up to €500,000 per applicant, at most 35% of eligible costs, 10 or 15 years natural persons who take over management, through the Hausbank personal liability is a precondition, 100% guarantee from a Bürgschaftsbank, a GmbH cannot apply
KfW ERP-Förderkredit KMU (365/366) up to €25M, 5 to 20 years, up to 3 repayment-free years SMEs, expressly including an operative holding, a non-operative holding only for acquiring shares, through the Hausbank variant 366 with its 50% Haftungsfreistellung (KfW takes half the credit risk off the bank) needs 2 complete financial years with accounts
Bürgschaftsbank Hessen, klassische Bürgschaft up to €2M, up to 80% of the loan for investment the Hausbank, jointly with the company 1.5% once and 1.5% a year on the guaranteed amount, each plus VAT, no rescue loans, no refinancing
Bürgschaftsbank Hessen, Express-Bürgschaft up to €300,000 of loan, 60% cover, decision usually within 3 to 5 working days the Hausbank company at least 3 years old, positive equity, at least €1 of profit
Bürgschaftsbank Hessen, Bürgschaft ohne Bank external debt up to €450,000, up to €650,000 for successions, up to 80% for investment the company directly, no bank involved guarantee commitment first, then the bank, no rescue loans, no refinancing, no negative equity
WIBank Kapital für Kleinunternehmen €25,000 to €150,000 Nachrangdarlehen (subordinated loan), 7 years, 1 repayment-free year, 7.62% a year (as of 1 August 2026) small companies seated in Hessen, up to 25 staff, up to €5M revenue, through the Hausbank the purchase price cannot be financed, the Hausbank adds at least 50% on top, applications by 31 December 2026
MBG H, stille Beteiligung €100,000 to €1.5M in the growth programme, €5,000 to €100,000 in micro-mezzanine the company directly takeovers and successions expressly in scope, terms per case

As of 25 August 2026, read on kfw.de, bb-h.de, wibank.de and mbg-hessen.de. Check rates and deadlines again before any commitment.

Programme 077 is the loan everyone names first, and it is closed to a GmbH buyer. Its Merkblatt, the programme leaflet (dated 10 December 2025), admits natural persons, requires the applicant's personal liability, and excludes the pure purchase of shares as a financial investment. Its 35% cap on eligible costs also binds long before the €500,000 headline: on a €350,000 business that is about €122,000. A buyer purchasing through a holding uses 365/366 instead. KfW expressly admits an operative holding that takes part in the day-to-day business of its subsidiaries, and a non-operative holding for the acquisition of company shares. The 50% Haftungsfreistellung of variant 366, under which KfW takes half the default risk off the Hausbank, requires two complete financial years with a Jahresabschluss, the annual accounts. A fresh acquisition vehicle has none, the holding behind it may. Which company becomes the borrower is therefore a Steuerberater question, meaning one for the tax adviser, before it is a bank question.

The Bürgschaft ohne Bank is the only instrument in the table that starts without an existing bank relationship. The company approaches Bürgschaftsbank Hessen directly, the bank assesses the plan, and if it holds, it issues a Bürgschaftszusage, a guarantee commitment. With that commitment the buyer then goes to banks and savings banks, and most of the risk already belongs to someone else. Bürgschaftsbank Hessen reported a record €90.2M of new guarantees for 2025, of which around 55% went to business successions, at a default rate of 1.8% (release of 9 February 2026). Two points stay open: the page names a "Fremdkapitalbedarf bis 650.000 €" for successions, an external-debt requirement of up to €650,000, which reads as a cap on all external debt including the guaranteed part, and which tier a newly founded acquisition vehicle falls into is not on the page. The fees are real: on a €500,000 loan with €400,000 guaranteed, €6,000 plus VAT up front and €6,000 plus VAT a year. And a guarantee is not money, a bank still has to write the loan.

WIBank, the development bank of the State of Hessen, does not finance the purchase price itself. Its Kapital für Kleinunternehmen programme excludes, per its Merkblatt of 1 January 2025, the takeover price and the repayment of the seller's old liabilities. It serves the acquired business after closing: €25,000 to €150,000 of subordinated loan with no conventional collateral, which a bank counts as economic equity, provided the business is at least three years old, is seated in Hessen, and the Hausbank adds at least half the amount at its own risk. Applications must arrive by 31 December 2026, and the rate is 7.62% a year (as of 1 August 2026). WIBank's free funding advisory for southern Hessen is the cheapest appointment on the whole list, because it maps federal and state programmes in one conversation.

MBG H, the Hessen mezzanine fund, fills the gap when the price exceeds the equity and the seller will not stretch further. A stille Beteiligung, a silent partnership, is capital that counts as equity on the balance sheet, carries no votes and dilutes no shares. Takeovers and successions are expressly in scope of its growth programme.

A €1.5M purchase in three layers

The model above stops at €990,000. For the case where a larger business in the Rhein-Main region comes to the table, here is the structure a bank funds: a GmbH bought for €1.5M, run by an installed manager, with €330,000 of normalised operating profit after that manager's market salary, so about 4.5 times.

Layer Amount Share Term
Buyer's equity €500,000 33%
Seller loan, subordinated €400,000 27% about 6 years
KfW loan through the Hausbank (365/366) €600,000 40% about 10 years
Total €1,500,000 100%

As of August 2026, our estimate, illustrative. Every figure moves with the actual bank rate, the seller's terms and the acquisition vehicle's tax position.

Does the cash flow carry it? After replacement investment and tax, about €224,000 a year is available for debt service. Bank and seller together want about €154,000. That gives coverage of about 1.45 on the total debt, above the 1.30 floor. Because the seller loan ranks behind the bank, the bank's coverage on its own layer alone is about 2.9, which is why it funds this shape. Operating profit can fall 10% to 12% before the total ratio touches the floor.

The borrowing ladder: 334 basis points between the first rung and the last

The rate a buyer gets today is the worst rate he will ever get. The Hausbank assigns every borrower a price class from creditworthiness and collateral, and KfW publishes an effective rate per class. A buyer with no filed accounts realistically lands in classes D to F. The ladder below is our estimate, anchored to the effective rates in the KfW rate finder as of 24 August 2026 (10-year term, 2 repayment-free years, 10-year fixed rate).

Rung Reached when Rate (our estimate) Anchor in the KfW rate finder Lending capacity Personal guarantee
0. No track record today 7.76% 077, price class F guarantee limit only required
1. Filed and repaying 2 clean years 6.39% 077, price class D about 2.0x group EBITDA required
2. Established 4 clean years, €250,000 EBITDA 5.67% 365, price class D about 2.75x negotiated
3. Relationship borrower 6 clean years, €500,000 EBITDA 4.42% 365, price class A about 3.25x not required

As of 24 August 2026 for the anchor rates (KfW Konditionenanzeiger, effective annual rate, standard region). The mapping to rungs, the lending capacity and the guarantee column are our estimates from programme conditions and bank practice, and no bank has committed to them.

Between the top rung and the bottom lie 334 basis points and the difference between a mandatory personal guarantee and none. The two complete financial years of rung 1 are the same two years KfW requires for the liability release of variant 366. Reaching rung 2 sooner makes the later purchases cheaper and larger, and that is most of the reason grow first beats delever first in the table. The first rung is made of paper: filed annual accounts, a clean bank profile, a dated statement of assets, a credit report. None of it needs a decision, and all of it needs calendar time.

The credit hurdle: 40.5% in the second quarter of 2026

The KfW-ifo Kredithürde measures the share of companies that, in credit negotiations over the previous three months, describe their bank's behaviour as restrictive. In the second quarter of 2026 it was 40.5% of Mittelstand firms, the highest reading since the series began in 2017 and 6.5 percentage points above the previous quarter. Large firms reported 32.9%. Only 19.3% of Mittelstand firms were in credit negotiations at all. In retail the share exceeded 50% in both size classes, in services it was 42.4% (KfW Research, release of 7 July 2026, the latest edition at the time of writing).

What that changes: the tolerance for a thin file is gone. In an easy market a banker fills gaps for a client he likes. At a record reading, a missing Jahresabschluss ends the conversation. The price class for a first-time buyer slides toward E to F, so 7.02% to 7.76% on 077 and 6.30% to 7.03% on 365. And the six to nine months from a first introduction to a bank that will move on a purchase gain a quarter.

What it does not change: the subsidised instruments are built to be counter-cyclical. The 100% guarantee behind 077, the 50% liability release behind 366 and the 80% of a classic guarantee take from the bank exactly the risk it currently fears, and a restrictive market pushes purchases into these instruments. An introduction consumes no credit appetite and occupies no committee, so a restrictive quarter is a fit for the first introduction.

Where the salary is paid

Whoever owns every company in the group alone decides by which route money leaves it. The question in the model: what must the group earn before tax to put €50,000 a year in the owner's pocket?

Two terms first. §8b KStG is the rule under which profits a subsidiary distributes to its parent company are left out of the parent's income, with 5% of them deemed non-deductible business expenses. In practice 95% arrives tax-free and about 1.5% is lost. The Abgeltungsteuer is the flat rate of 25% plus the 5.5% solidarity surcharge on it, together 26.375%, that a private person pays on dividends. The Teileinkünfteverfahren is the alternative: only 60% of the dividend is taxed, at the person's own income-tax rate.

Route Group must earn Total tax All-in rate
Salary from the operating company €98,760 €48,760 49.4%
Dividend, Abgeltungsteuer €101,391 €51,391 50.7%
Dividend, Teileinkünfteverfahren €101,682 €51,682 50.8%
Salary from the holding €147,447 €97,447 66.1%
Leave it inside the holding €74,649 €24,649 33.0%, deferred

As of August 2026, our estimate from the planning model at a combined tax rate of about 32% at the operating company. The burden depends on the municipality's Gewerbesteuer-Hebesatz (the local trade-tax multiplier), the personal tax rate and the managing director's social-insurance status. This table does not replace a Steuerberater's calculation for the actual case.

Where a salary is paid matters more than whether. From the operating company it is the cheapest route, narrowly ahead of a dividend. From the holding it is by far the most expensive, because the holding's income is 95% tax-free and a salary deducted there is set against almost nothing. The same €50,000 costs €48,760 of tax one way and €97,447 the other. Leaving money inside the holding is the cheapest, because nothing personal has been taken out and so no personal tax has fallen due. A managing director's salary must also be at arm's length, or the tax office treats the excess as a verdeckte Gewinnausschüttung, a hidden profit distribution. Everything in this section goes to the Steuerberater before the first payment.

What this means for you

For buyers:

  • Work out debt payments as a share of the price before looking at any business. At 17.2% on the full stack, a 1.30 floor carries at most 4.48 times. A business above that is an equity purchase or no purchase.
  • Negotiate the seller loan before looking for capital. On €350,000 each percentage point is worth €3,500.
  • Decide with your Steuerberater who the borrower will be before approaching a bank. 077 wants a person with personal liability, 365/366 takes an operative holding, and the 50% liability release needs two years of accounts.
  • We build the acquisition model for a purchase with three financing variants and debt-service coverage in each, from €3,900 net: Financial modelling. The bank-ready business plan to go with it starts at €2,900: Business plans.

For sellers:

  • A buyer asking for a seller loan is offering you interest and a buyer who can convince the bank. At 30% on €350,000 you finance €105,000 over six years.
  • Three clean sets of annual accounts and a balance sheet without negative equity are the ticket into every guarantee. Without them the Express-Bürgschaft falls away and the Bürgschaft ohne Bank gets hard.
  • If you want to sell to a permanent owner in Rhein-Main, our buying profile with purchase prices of €300,000 to €1M is here: Acquisitions.

For tax advisers and bank contacts:

  • The cancellation rule in the coverage section saves the second meeting: the multiple and the borrowing mix decide, the size of the business does not.
  • Where the acquisition debt sits changes every levered return. Interest at the target shields profit taxed at about 32%, interest at the holding hits income that is 95% exempt.

Where we could be wrong

  • If Bürgschaftsbank Hessen reads the €650,000 as a cap on all external debt and places a fresh acquisition vehicle in the €450,000 tier, the Bürgschaft ohne Bank covers businesses only up to about €600,000 of price, and the larger business with a bank (rows 3 and 4) stops working.
  • If a 30% seller loan cannot be obtained three times in a row and the band ends at 20%, the capital required for the first route rises from €450,000 to €555,000, and the gap to €400,000 can no longer be negotiated away.
  • If the true ceiling for a single buyer is four businesses rather than eight, the multiple on the first route roughly halves, and the no-debt route loses its lead on absolute value.
  • If the coverage of the large business with a bank falls below 1.04 in a bad year, which happens on an earnings drop of more than 20%, the thinnest row of the table breaks first.

FAQ

How large is a seller loan usually?

The published practitioner range is 10% to 20% of the price, and our planning band is 20% to 50% with 30% as the base. A practitioner note from January 2024 names three to five years, 3% to 5% interest and always a subordination behind the bank. We plan on six years and 5%, and the 5% is our assumption. The higher the share, the more of his own money the buyer keeps: on a €350,000 business each percentage point replaces €3,500.

Can a GmbH use KfW loan 077?

No. The leaflet for the ERP-Förderkredit Gründung und Nachfolge (dated 10 December 2025) admits natural persons who carry on or take up a commercial or professional activity, and requires the applicant's personal liability. The pure purchase of shares as a financial investment is excluded. A GmbH or holding uses the ERP-Förderkredit KMU (365/366) instead, which expressly admits an operative holding. For the 50% liability release of variant 366 it needs two complete financial years with accounts.

What debt service coverage does the bank want to see?

Our own floor is 1.30 in a normal year and 1.00 in a bad one, and the bank calculates on its own senior layer. In the €1.5M example the ratio on total debt is about 1.45 and on the bank loan alone about 2.9, because the seller loan ranks behind it. Which convention the bank uses (straight-line or annuity, EBITDA before or after replacement investment) moves the supportable ceiling between 4.48 times and about 6.35 times. Ask in the first meeting.

Is salary or dividend cheaper?

In the model a salary from the operating company at a 49.4% all-in burden is narrowly cheaper than a dividend at 50.7% under the Abgeltungsteuer. A salary from the holding costs 66.1%, because the holding's income is 95% tax-free and the deduction lands on nothing. Leaving money inside the holding costs 33.0% and defers the rest. These are our estimates, they depend on the trade-tax multiplier, the personal tax rate and the arm's-length test on the salary, and the Steuerberater calculates the actual case.

Further reading

Sources

Nothing here is legal or tax advice. Your Steuerberater and Anwalt decide before anything binds.

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