Funders' Wish List
Whether you’re buying or selling a business, understanding the
expectations of any potential funders will ensure the transaction
completes as smoothly and quickly as possible.
“Selling or buying an established business can
have lots of positives and if you want to increase your chances of
a successful sale it’s worth understanding what potential funders
are looking for, whether you’re buying or selling. By keeping in
mind the transaction what’s on the a potential funder’s ‘wish list’
you’ll have the best chances of success,” Chris Griffiths, a
succession expert at Finance Wales explains.
1. A strong management
Will the business be in good hands going
forward? Demonstrating that there’s a planned handover to a strong
management team will boost potential funders’ confidence.
2. Robust and reliable management
Up-to-date management information will inspire
confidence. By putting effective financial and operational
processes in place it can help improve efficiency and control
3. Formal contractual
Potential funders will want to know that
you’ve agreed contractual terms with all customers and suppliers
and that they’ll be unaffected by the sale of the business.
4. Profitability and cash
Any change of ownership is likely to increase
a business’ debt levels, so potential funders will be looking for a
solid track record of cash generation.
5. Order book and future
A strong order book will help to convince
potential funders that the business will be starting in a strong
position under new ownership.
6. Existing debt levels
Potential funders are unlikely to back a
transaction if a business already has high debt levels.
7. Vendor flexibility
Increasingly, vendors are being expected to
agree a deferred consideration to help fund a transaction,
demonstrating their confidence in the business and its future
Find out about more about our succession funding.