Self-funding flywheel

An informal acquisition strategy that uses cash available from existing businesses to help finance later purchases. It aims to limit repeated external equity raises; some versions also use borrowing, which is external funding.

Self-funding flywheel in round numbers

Hypothetical: a holding company raises US$20 million of initial equity. Later acquisitions depend on subsidiary cash available after reinvestment, working-capital needs, debt service, reserves, and distribution restrictions. Limited borrowing may supplement that cash, but further equity could still be needed.

Simplified cash-flow categories, not a funding forecast
  • Operations generate cash; only the amount available after other needs can support purchases.
  • Acquisition payments generally appear as investing cash outflows.
  • Borrowing or new equity provides external financing.

Programmatic M&A · Centralized capital allocation · Bolt-on acquisition · All of the glossary