Meeting With Your Bank To Finance An Acquisition

Decision Associates M & A - Meeting With Your Bank For Lending Rquests

Decision Associates M & A can help you prepare for meeting with your bank to finance an acquisition.

In our experience, a bank has two core questions when reviewing your request:

  • How will your company grow sales and cash flow in the new acquistion? Remember, growth and cash flow are how you will support debt payments and become a better long-term customer.
  • What marketable assets do you have - cash, receivables, buildings, equipment, inventory, patents, personal assets, contracts – to back up the loans in the event of default?

Preparing for a bank presentation

  1. The management team
    Many banks say that this is #1. They have observed that the difference between competing companies in the same industry is “people.” Include resumes of your team members and be able to show the link between the quality of the team and recent performance (unless both are poor).

  2. Financial performance
    Gather income statements, balance sheets, capital expenditures and cash flow statements. Be able to describe what has driven positive performance and any underperformance.

  3. Long term strategy
    What are you going to do to compete and grow? What products/services in what markets? What strategies? This is best presented in the form of a strategic plan.

  4. Mid and long term proformas
    Two, three and five year financial projections based on the strategic plan, market assumptions and past performance. Include proformas for balance sheet, income statement, cash flow, borrowing, capital investment and any capital infusions, e.g. investors, your investment, owner lending.

  5. Security
    What assets do you have to secure the lending? Appraisals, auction results or recent transactions to justify the value of the security? What personal assets can you and others pledge? What is already collateralized?

  6. Risk assessment
    What risks do you see in the industry in the coming years? How are you prepared to address these risks?

  7. Legal and regulatory issues
    Are you dealing with any lawsuits, OSHA actions, DEP actions and security issues?

For more information on how to prepare for meeting with your bank to finance an acquisition, contact Decision Associates M & A.

 

"The Performance Review that Decision Associates created not only meets all of our needs but exceeded our expectations. We have been utilizing this format for several years now and have found the review easy to complete for both management and employees. The Performance Review is an interactive process that promotes employee engagement directly related to the primary responsibilities of each position and puts the employee in the driver's seat of their professional growth. This review process has proven to be meaningful to our employees demonstrated by employees talking about their review and the objectives they have set for themselves throughout the year."

~ Sara Wurst, Director of Operations
Verify Services, LLC

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