Quality books and records – Lenders require good books and records to trust the information they are relying on. If your books and records are not in good shape, you should remediate them and have your financials audited, or at least reviewed, by an accounting firm. Most deals get delayed in due diligence if the accounting records are weak.
Strong Growth Strategy – Develop a growth plan based on third party data and internal financial data. Refine your plan and make sure you think of all major pitfalls. Lenders want to fund into a well-thought out and well-presented growth strategy – whether it is an acquisition of another company or going into a new market.
Strong Presentation – The funding market is competitive and you want to present your business as well as possible. It often pays to have an outside professional handle this presentation. There are standards and conventions in presenting your company that you may not be familiar with. A presentation advisor will ensure that your company is presented in the best way.
Well-rounded management team – Lenders fund companies led by teams not single individuals. Having a head of operations, a head of sales and a controller or CFO is preferred. Make sure that your management team biographies are in your presentation.
Do your homework – Many companies struggle to look for funding because they do not research their options beforehand. The finance industry has changed quite a bit over the past 5 years. Banks are more restrictive and finance companies are more aggressive. Take the time to learn what type of funding you can get and make sure you consult with advisors.
Be Honest about your weaknesses – All companies have a weakness or two, whether it is historical performance, the condition of the balance sheet or loss of a customer. If presented properly, you can get a lender comfortable with this. Lenders are pretty sharp and have done business with many companies. If there is a problem that is covered up, chances are they will see it, and it could jeopardize the deal.
Sales Visibility – Lenders like numbers that help them gain comfort with forward projections. If you have a sales backlog or pipeline, that will help them build confidence with your numbers.
Relationship Building – Getting funding is like any sales process, and it requires a lot of relationship building with your soon to be financial partner. It is more than just an application process. It is a subjective process where the lenders gains trust as to the character of the management team.

In the acquisition financing arena, capital availability is destiny as companies require reliable access to capital to grow over the long term. Unforeseen capital needs usually arise when acquirers least expect it. This can cause some concern for the acquisition financing provider, especially when covenants tighten up and that working capital availability is utilized faster than expected.

Mezzanine debt borrowing is usually a straightforward activity that many companies use for funding of transitional growth. Mezzanine debt lenders are highly transparent about their due diligence approach and their post-closing loan management making it easy for companies to engage with.

Elections have consequences and positive ones at that for the acquisition financing middle market. While much media attention is paid to the direction of the yield curve and the Fed’s likely rate cuts, scant attention is paid to the more important drivers of the acquisition financing market – business psychology and regulatory climate.

Looking for Funding? Before You Go to Market, Here’s Your Top 8 Checklist

What We Offer

Latest M&A Industry Updates!

Get a Free Consultation!