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Dear {{first_name}},

In an ideal world, all business sales would be with a single buyer coming up with a lump sum cash amount and paying in a single go from their debit account.

But this is not an ideal world.

So in order for you to sell your company with a well deserved exit, it’s important to help buyers get over the finish line and make the acquisition process as easy as possible for them.

Remember, in a business exit, the buyer is the customer and you want to remove as many friction points as possible.

Normally the biggest obstacle to a deal getting done is the price, and the biggest issue with the price is finding the money (someone with infinite money won’t mind overpaying).

So if you can pre-arrange a large part if not the bulk of the acquisition cost, it makes getting a deal done so much easier. Here are the three best ways to do it, but first a word from our sponsor Remofirst:

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The 3 Best Ways to Line Up Finance Before You Sell

  1. Bank Pre-Approval Letters
    Approach acquisition finance teams (not just your local branch). With three years of clean accounts and a debt service coverage analysis (if relevant), you can secure a conditional letter stating how much they’d finance for a qualified buyer. This is the main way of pre approving acquisition finance in most markets, and will also give you a good idea of a reasonable valuation to take to market

  2. Government-Backed Loans
    There are several government backed programs that help with business transfers. Governments have an incentive to keep businesses going after the owner retires just like keeping the housing market liquid. In the US, SBA pre-approvals are common. In the UK, British Business Bank programs and other growth finance initiatives can do the same. These options widen your buyer pool by making financing possible for first-time or management team buyers.

  3. Private Equity & Investor Commitments (via Brokers/Advisors)
    Experienced M&A advisors maintain relationships with private equity funds and family offices. Often you will find funds that say, “We’d fund an acquisition in this sector” Usually as a bridging loan to be refinanced later or a ‘take a stake’ agreement. This is obviously reliant on the fund and I would put more weight on the first two options, but including that in your sale pack reassures buyers that capital is ready and waiting.

What to do to have the best chance of pre approvals

Lenders operate on a tick-box basis, the more of them you have the better your chances, for example:

  • Able to provide good collateral by the LLC

  • Gross profit margin

  • Current and physical assets

  • Quality accounting (going back 3 years)

It’s not a mystery, in fact it’s a good idea to ask the bank up front what their requirements are and work off that.

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Here’s to your success,

Unlocking Wealth Weekly

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