Committed Acquisition Facilities: Fuel for Ambitious Growth in the UK SME Sector

In today’s competitive and fast-moving business environment, growth through acquisition has become a cornerstone strategy for many UK-based small and medium-sized enterprises (SMEs). Whether consolidating fragmented markets, entering new geographies, or acquiring complementary capabilities, the ability to act swiftly and decisively is often the difference between seizing an opportunity and watching it slip away. This is where a Committed Acquisition Facility (CAF) can prove invaluable.

A Committed Acquisition Facility is a pre-agreed line of credit provided by a lender, typically a bank or specialist debt provider, which is earmarked specifically for funding future acquisitions. Unlike a standard revolving credit facility, a CAF is not intended for general working capital purposes. Instead, it is structured to support a company’s buy-and-build strategy by ensuring that capital is readily available when acquisition opportunities arise. Once drawn it operates like a term loan and may have amortising and non-amortising elements.

The key feature of a CAF is its commitment—unlike with an uncommitted accordion facility, the lender legally agrees to provide the funds under pre-defined conditions, giving the borrower certainty that financing is secured in advance, without the need for a full credit process or extensive legal documentation at the time of drawdown. This certainty can be a game-changer for management teams looking to move quickly in competitive M&A processes. Historically available to larger corporates, Shawbrook is bringing this flexibility and capability to the lower mid-market space.

1. Speed and Certainty of Execution

In acquisition scenarios, timing is often critical. A CAF allows management teams to act decisively, knowing that funding is already in place. This can be particularly advantageous in competitive bidding situations, where sellers favour buyers with committed capital.

2. Strategic Flexibility

With a CAF in place, businesses can pursue multiple acquisitions over time without needing to renegotiate financing for each deal. This flexibility supports a proactive, rather than reactive, growth strategy.

3. Enhanced Credibility

Having a committed facility signals financial strength and preparedness to potential sellers, advisors, and investors. It demonstrates that the business has a clear growth plan and the means to execute it.

4. Efficient Use of Capital

Since funds are only drawn when needed, businesses avoid the cost of holding excess cash on the balance sheet. Interest is typically only payable on drawn amounts, with undrawn amounts accruing only a non-utilisation fee, making it a cost-effective solution.

While the benefits are compelling, incorporating a CAF into a business’s capital structure requires careful planning and alignment with broader strategic objectives. Here are some key factors UK businesses should consider:

• Eligibility Criteria and Covenants
  Lenders will typically set out specific conditions under which the facility can be drawn—such as acquisition size, sector, or financial metrics (potentially linked to existing financial covenants) . Understanding and negotiating these criteria is essential to ensure the facility remains usable in practice. Acquisitions outside the pre-agreed parameters may still be able to be funded using a CAF, but this would require consent from the lender and potentially involve them going through a short credit process.
• Diligence Requirements
  In addition to parameters around what sort of acquisitions may be funded by a CAF, there will usually be requirements for certain information to be delivered to the Lender prior to usage; potentially including 3rd party due diligence for larger acquisitions. Borrowers must therefore be mindful of these information obligations and ensure they allow for these in their acquisition planning.
• Tenor and Availability Period
  CAFs are usually available for a defined period (e.g. 12–36 months). Businesses must ensure this aligns with their acquisition pipeline and strategic timeline. Typically any drawdowns under CAFs would be aligned to the existing loan maturity.
• Cost of Commitment
  Even if undrawn, a CAF may attract a non-utilisation or commitment fee. While this is generally modest compared to the drawn interest costs, it should be factored into the overall cost-benefit analysis; balancing cost vs certainty. An arrangement fee will also typically be payable when the CAF is established, so CAFs are typically less suitable for businesses which are uncertain on whether they may pursue an acquisition strategy. Sometimes a combination of a CAF (which carry some costs) and an uncommitted accordion (which typically do not) represents the right balance for a business.
• Integration with Existing Debt
  The CAF should be structured to complement existing debt facilities, avoiding conflicts in covenants or repayment schedules. This often requires a holistic view of the capital structure.
• Lender Expertise and Flexibility
  Not all lenders are equipped to structure and manage CAFs effectively. Working with a bank or debt provider that understands the nuances of acquisition-led growth is crucial.

Recent examples of how we’ve supported customers in the UK market highlight the growing popularity of CAFs among acquisitive SMEs. For instance, Shawbrook Bank structured a £14.5 million funding package for Futura Financial Services Group, including a £10 million Committed Acquisition Facility to support its buy-and-build strategy in the IFA sector. The facility has provided Futura with the capability to act swiftly and negotiate from a position of strength as they identify new acquisition opportunities, by having a committed line of funding available.

Software Circle plc (AIM.SFT), a vertical market software acquirer, secured a £16.7m loan facility from Shawbrook to simplify the Group’s capital structure and provide capital for future merger and acquisition (M&A) opportunities. Shawbrook completed an in-depth assessment of the client’s long-term objectives and structured a two part solution incorporating a commercial loan and a committed acquisition facility to facilitate the bond redemption and provide additional funding for future acquisitions.

These examples underscore how CAFs can empower management teams to pursue growth with confidence, knowing that funding is ready and waiting—provided the agreed criteria are met.

For UK SMEs on a growth journey, a Committed Acquisition Facility can be a powerful enabler—unlocking speed, certainty, and strategic agility. However, its effectiveness hinges on thoughtful structuring and alignment with the business’s unique needs. Something in the past only accessible for the largest of transactions.

That’s why it’s essential for borrowers to work closely with their advisors and specialist lenders who can go beyond the vanilla and can provide tailored debt facilities which accommodate the nuances of SME clients. The right partner will take the time to understand the business’s ambitions and craft a facility that is not only flexible but also future-proof. In a world where opportunity favours the prepared, a well-structured CAF could be the key to unlocking the next chapter of growth.