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.

 

“When we needed to make a new hire, we contacted Decision Associates. We were very pleased with the process that they used and the attention they gave to our company. Though we didn’t find the ideal candidate for the job, they moved us in a direction that actually made more sense than hiring. They guided us on the right path for the changes and made recommendations that were perfect for our organization. They looked at what the best decision for our company was, even though it wasn’t the first path that we took. We valued the insight, suggestions and the good working relationship that we built. I wouldn’t hesitate to recommend Decision Associates for recruiting and/or operational improvements.”

~ Steve Henderson, President
Great Lakes Cast Stone, Inc.

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