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.

 

“Decision Associates exceeded our expectations, which were very high to start with, and we were pleased with the result of their work and assistance on our strategic plan. They were the right organization at the right time to help our organization become what we need to be in the next few years. They led us in such a way to allow us to move forward, which is not always easy, and accomplish a lot in a short time. The proof is that the strategic plan has been widely acknowledged as being perfect for us with comments coming not just from within, but from the community as well. We will engage them again when we are ready for an update.”

~ John Oliver, President
VisitErie

Subscribe to our Decision Point Newsletter