11 Ways to Finance a Deal with Nothing Out of Pocket: How Roland Frasier Stacks "Lego Blocks" to Creatively Fund Acquisitions

This week’s newsletter comes from the most-watched Business Acquisition Summit presentation ever — from Roland Frasier.

Discover the framework that turned a $700K cash requirement into a zero-down deal in just 3 months:

When someone came to Roland Frasier for help with a car wash acquisition, the numbers looked daunting. The seller wanted $2.5 million, and initial calculations showed his client would need to come out of pocket $700,000. Three months later? Zero dollars out of pocket.

How did they pull this off? It’s through what Roland calls "deal stacking" — a systematic approach to creative financing that treats funding sources like Lego blocks, combining them in endless configurations until you've built a bridge from the asking price to a fully funded transaction.

With over 1,000 lifetime acquisitions under his belt and portfolio companies generating more than $6 billion in annual sales, Roland has developed nearly 300 different ways to fund deals, but you don't need all 300.

Today, we'll walk through his core framework that can eliminate your cash requirement on virtually any acquisition ⬇️

The Gap Analysis That Changes Everything

Roland starts every deal the same way — with what he calls "gap analysis." It's deceptively simple:

• At the top: The asking price (let's say $1 million)

• At the bottom: What you want to come out of pocket (ideally zero)

• In between: The gap you need to fill

"The way I like to do it is say that it's going to take a lot of different things to fill that gap," Roland explains. "The easiest way would be if you have a pile of cash, but that's really too easy in my mind. It's not even fun to play that way."

Instead of reaching for your wallet, you reach for your toolkit of creative financing strategies.

The 20/80 Opening Gambit

Roland's favorite opening offer follows what he calls the "20/80 deal structure":

• 20% earnout: Performance-based payments tied to future results

• 80% seller financing: The seller acts as the bank

"This is a really common way that I find you can start a deal just to get a conversation going," he notes. In our $1 million example, that means asking for $800K in seller financing and structuring a $200K earnout.

Why this works so well:

For the earnout portion: It bridges the valuation gap. If the seller believes their business is on a "hockey stick" growth trajectory, the earnout lets them prove it. If they're wrong, you don't pay the extra amount. If they're right, you pay it from the improved cash flow.

For the seller financing: You're essentially asking the seller to be your bank, securing the note with the business itself. This is common across all countries and often results in better terms than traditional financing.

But what happens when sellers say no to 80% financing? That's where the real magic begins.

The Lego Block Strategy: 11 Ways to Fill the Gap

When Roland's initial 20/80 offer meets resistance, he doesn't retreat — he gets creative. Let's say the seller will only do $100K in seller financing and $100K earnout. Now you've got two "Lego blocks" totaling $200K, but you still have an $800K gap to fill.

Here's 11 examples of how Roland deploys his arsenal of creative financing strategies:

1. Accounts Receivable Factoring ($100K)

If the business has money owed by customers, factors will buy those receivables for 50-85% of their value. With $150K in receivables, you might generate $100K in immediate cash.

2. Credit Card Reserves ($100K)

This is Roland's "hidden goldmine." Many businesses don't realize they can negotiate the release of credit card processing reserves. In one deal, Roland discovered $2 million in reserves — enough to pay for the entire acquisition.

3. Inventory Consignment ($100K)

Instead of buying inventory outright, negotiate to consign it. The seller retains ownership but lets you use it, paying them back as items sell. "If the inventory turns 12 times a year, the seller gets paid back in a month," Roland explains.

4. Integrator Equity ($100K)

Identify key employees who want ownership but never thought it was possible. Offer them equity in exchange for investment. "I don't have to sell them that equity at the same valuation I'm buying the business at," Roland notes. It's like wholesaling—buy low, sell higher.

5. Revenue-Based Financing ($100K)

Companies with consistent revenue history can access RBF loans secured by future revenue streams. These lenders bet on business continuity rather than assets.

6. Supplier Loans ($100K)

This strategy has 3 levels:

• Level 1: Ask suppliers to invest cash for guaranteed future business

• Level 2: Request loans with favorable terms

• Level 3: Negotiate extended payment terms (30, 60, or 90 days instead of cash on delivery)

Roland shares a compelling example: "Home Depot gave us $2 million upfront and promised another $2 million after two years just to keep us as customers."

7. Merchant Loans ($100K)

Credit card processors like American Express often provide loans to established businesses. If the current business can't qualify, have the seller get the loan pre-closing, then assume it as part of the deal.

8. Carve-Outs ($50K)

Don't want all the assets? Reduce the purchase price by the value of what you're leaving behind. Roland once carved out unwanted business units and reduced a purchase price by 75%.

9. Sponsorships ($50K)

Unlike investors who own equity forever, sponsors pay annually for access to your audience or customer base. They're renewable, non-dilutive, and you control the relationship.

10. Strategic Investors ($100K)

Find non-competing businesses that could benefit from your customer base. Their investment gives them skin in the game and natural cross-selling opportunities.

11. The Deferred Down Payment

This is Roland's secret weapon for accessing post-closing strategies before you actually own the business. It's a short-term note (30-120 days) that gives you title to execute strategies like receivables factoring or asset-based lending, then use that cash to pay the seller.

"I can't think of a single objection I've ever had to this," Roland says, "because either you get the money or you don't."

The Critical Pre-Close vs. Post-Close Distinction

Not all strategies can be implemented the same way. Some require ownership first:

Pre-Close Strategies:

• Inventory consignment

• Integrator equity

• Supplier negotiations

• Carve-outs

• Deferred down payment

Post-Close Strategies:

• Accounts receivable factoring

• Asset-based lending

• Credit card reserves

• Lines of credit

Either/Both:

• Merchant loans

• RBF financing

• Supplier loans

Understanding this timing is crucial for structuring your deal and managing cash flow.

The Tax Optimization Secret

Roland adds another layer of sophistication: Optimizing the tax treatment of your payments.

"If I'm operating in a market with 50% tax, I need to earn $32K per month to get my $16K monthly payment," he explains. "But if I can change that $16K payment from a non-deductible post-tax spend to a pre-tax deductible item, I only have to earn $16K."

The solution? Structure payments as interest-only for the first year, making them 100% tax-deductible, then backload principal payments when the business has grown.

Real-World Results: The Car Wash Case Study

Remember that $700K cash requirement we started with? Here's how Roland's team eliminated it entirely using these strategies:

• Month 1: Started with seller financing and earnout negotiations

• Month 2: Identified credit card reserves and inventory opportunities

• Month 3: Structured integrator equity and supplier terms

• Result: Zero cash out of pocket on a $2.5 million acquisition

"It's amazing how little you really have to come out of pocket if you can tap creativity and be patient in the negotiation process," Roland reflects.

The Wealth-Building Secret Behind the Strategies

Roland's approach goes beyond just creative financing — it's about "folding time" to accelerate wealth building.

"Let's say you exit for a 10X multiple every five years," he explains. "That means each time you exit, you've received 10 years of income in a day. Do that four times over 20 years, and you've earned 40 years more income than someone who just held onto their businesses."

For acquisition entrepreneurs doing one deal per quarter, that's 120 years of compressed income annually. "When you think about folding time like this, the wealth building becomes exponential."

Your Implementation Framework

Ready to apply Roland's approach? Follow this systematic process:

Step 1: Map your gap (asking price minus what you want to invest)

Step 2: Start with the 20/80 offer (20% earnout, 80% seller financing)

Step 3: When you meet resistance, deploy additional "Lego blocks" from the 11 strategies above

Step 4: Ensure each strategy aligns with pre-close or post-close timing

Step 5: Optimize tax treatment of payment structures

Step 6: Use deferred down payment to access post-close strategies when needed

The key insight? "You have a set of tools, but you can create new tools at will," Roland emphasizes. "There are so many different kinds of challenges and puzzles to solve within any one deal."

With nearly 300 financing strategies in his arsenal, Roland has proven that the only limit to creative deal structuring is your imagination. The question isn't whether you can afford to buy a business — it's about being creative enough to get it done.

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