How much of a buyer’s own money a Canadian acquisition actually requires depends heavily on deal size — and on how much of the rest a seller or a lender is willing to carry.
Key takeaways
“How much of my own money do I need?” does not have one Canadian answer — it scales with deal size, deal structure, and how much a seller is prepared to carry. What is consistent, across every published band, is that equity never disappears to zero. A lender always wants to see the buyer with something meaningful at risk before it will put its own capital behind the rest.
Deavo’s financing tool, covering Canadian acquisitions from roughly $200,000 to $30 million, states buyer equity directly for each band: “~25% — personal savings, often family or a partner” on a micro deal ($200,000–$1 million); “~30% — personal plus partner/investor” on a small deal ($1 million–$5 million); and “~35–45% — sponsor, search-fund or PE equity” on a mid-market deal ($5 million–$30 million). (deavo.ai/financing) The pattern is consistent: as deal size grows, the buyer’s own cash requirement grows both in dollar terms and as a percentage, because vendor take-backs shrink toward a smaller rollover stake at the top end rather than scaling up with the price. Every figure carries deavo’s own caveat — “an illustrative estimate only — never a financing offer, pre-approval, or financial advice” — so treat these as a planning range, not a number a lender is bound to.
Deavo’s own narrative on the capital stack is worth quoting directly: equity is “first money in, last money out… Lenders read it as commitment.” (deavo.ai/financing) That framing matters because a buyer who tries to shrink their own contribution by stretching the vendor take-back or borrowing more from a bank is not just moving numbers between boxes — a senior lender specifically reads the size of the buyer’s own cash commitment as a signal of how seriously the buyer will manage the business once it is theirs to lose. A structure with unusually thin equity, even if the arithmetic technically balances, tends to draw more scrutiny on every other number in the file, not less.
Personal savings, a partner’s contribution, or a family investor’s cash all count as genuine equity. A vendor take-back does not — it is debt the seller extends, subordinated behind the senior lender, and it shows up as its own line in the stack precisely because lenders do not treat it as the buyer’s own money at risk. Rollover equity, common at the mid-market end where a seller keeps roughly 5% of the new company rather than taking a note, is a different animal again: it is the seller’s continuing stake, not the buyer’s contribution, even though it sits in the same capital-stack table. A buyer assembling a financing plan should keep these three sources — buyer cash, seller debt, seller rollover — clearly separated, because a lender reviewing the file will.
ISED’s CSBFP FAQ is unambiguous: a loan “cannot… finance items such as share purchases.” (ISED FAQ) A buyer planning a share purchase — often the seller’s preferred structure for the lifetime capital gains exemption — loses access to the government-guaranteed portion of the senior tranche entirely. That does not directly change the equity percentage a lender wants to see, but it does shrink the pool of available senior debt for the same purchase price, which in practice often pushes a buyer toward either a larger vendor take-back, more expensive alternative capital, or genuinely more of their own cash to keep the deal financeable at all.
The equity figure a buyer plans for should not stop at the down payment on the purchase price itself. CSBFP’s own registration fee — 2% of the total loan amount — can be rolled into the loan, but a participating lender’s own conventional fees cannot: ISED is explicit that lender fees “are paid directly to the lender and cannot be financed under this program.” (ISED) On a deal using CSBFP alongside a vendor take-back, the buyer’s cash therefore needs to cover not just the equity percentage against the purchase price, but also whatever closing costs the lender charges directly — a detail that is easy to underbudget when a buyer is planning equity purely as a percentage of the deal size.
A first-time buyer is targeting a specialty retail business priced at $1,100,000 as an asset purchase, in deavo’s micro-to-small transition zone. Using the small-band split of 30% equity, 15% vendor take-back and 55% senior debt: equity of $330,000 is required in cash, a figure the buyer plans to raise as $220,000 in personal savings and $110,000 from a family partner who becomes a minority shareholder. The seller carries $165,000 as a four-year VTB, and the remaining $605,000 is financed through a chartered bank with a CSBFP guarantee, comfortably inside the eligible-asset ceiling once the deal’s equipment and leasehold components are appraised. The buyer’s $330,000 own-cash requirement is the number that has to exist before any of the rest of the stack becomes available — not a residual figured out after the debt is arranged.
Related: assembling the capital stack for a Canadian acquisition, buying with little cash and heavy vendor support, and choosing between a share deal and an asset deal.
A family or partner contribution counts as equity as long as it is genuinely at risk alongside the buyer’s own money, not structured as a loan to the buyer — a lender will typically want to see how that contribution is documented, since a disguised loan changes the real equity picture.
Deavo’s own framing is direct: equity is “first money in, last money out,” and lenders read its size as a signal of commitment. A buyer with real money at risk has a stronger incentive to manage the business carefully once it is theirs.
Not necessarily — more equity reduces leverage and debt-service risk, but it also ties up more of the buyer’s own capital in one asset. The published bands describe what lenders typically expect, not a ceiling on how much a buyer should put in.
The published equity percentages themselves are not stated separately by structure, but a share deal loses access to CSBFP’s guaranteed senior debt entirely, which shrinks the pool of available financing for the same price and often pushes the buyer toward a larger cash contribution, a larger vendor take-back, or both.
A short call is enough to size buyer equity against your deal’s structure and price.
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