When an Acquisition Plan Depends on Improvements After Closing

A buyer may see value that the current owner has not yet realized. A lodging property could benefit from renovation. A business may have room to expand its facility. A site may support additional development. Those opportunities can make an acquisition attractive, but they…

Original publication. The complete historical text and references are retained below. Historical wording may describe earlier platform plans.

09/28/26

When an Acquisition Plan Depends on Improvements After Closing

By Don McClain | Alianza Partners

The buyer should evaluate the transaction in stages: what exists today, what it will cost to make the improvements, how the business or property will operate during the transition, and what the completed asset can support.

Separate current value from projected value

An improvement plan can change when the buyer reviews permits, zoning, access, utilities, environmental conditions, construction costs, or customer demand. The acquisition analysis should identify which benefits are available now and which depend on work or approvals that have not occurred.

That distinction matters when negotiating the purchase price. Paying today for value that may require additional capital and risk to create can leave too little room for execution.

Fund the work as well as the purchase

Acquisition financing may get the buyer to closing without paying for renovation, development, or working capital during the transition. Construction financing, in turn, may require detailed plans, permits, a reliable budget, sponsor equity, and a defined repayment path.

Before closing, the buyer should know how much capital each stage requires and when it must be available. Seller financing, outside equity, or a staged transaction may help structure a deal, but the obligations and control rights of each participant need to be understood.

Test the exit under slower conditions

If the plan relies on selling or refinancing the improved asset, the buyer should test what happens when work costs more or takes longer. An income property may need time to lease up. An operating business may need to carry expenses while new capacity begins producing revenue.

A transaction is stronger when the buyer can explain the path through those stages and retain choices if the original timetable changes.

At Alianza Partners, we view capital structure as part of the acquisition and ownership transition. The closing is a milestone; the buyer’s ability to execute the plan afterward determines whether the opportunity works.

Don McClain explores the construction and development financing side of this issue in two new chapters of his forthcoming book, Funded.