External Financing Overview - How does the size of a target company affect the ability of a buyer to obtain external financing?

One would think that the smaller the target, the easier it might be to find financing. However; many sources of capital have a minimum below which they will not go in financing a deal—for example, $10 million.

How can a buyer find money to make acquisitions?

The art of M&A (merger-and-acquisition) financing is a subject worthy of an entire book. There are literally hundreds of specific sources of capital, ranging from an accounts receivable credit line to the Z-tranche of a collateralized loan obligation. The simplest source, of course, is the stock or cash the company already has in its treasury. In the typical case, the acquirer will need to take on new equity, new debt, or hybrids of the two.