How do search funders handle proof of funds request before an LOI?

by a searcher from Tulane University - A. B. Freeman School of Business

1 year ago

How do search funders handle proof of funds request before an LOI is submitted? I am looking at a few businesses and the broker is requesting a proof of funds letter? I plan on putting up a percentage of the amount, getting a seller's note, and getting an equity partner. If needed I can get a SBA loan. 

Thanks for your thoughts!
Canaan

5 likes
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37 comments

intermediary from Arcadia University

It's not about establishing credibility with the broker. Good brokers conduct buyer due diligence and screen all buyers before they reveal the details of the business and recommend the acceptance of an LOI. There is a lot of risk involved when we reveal the name and location of a business to buyers. Buyers that refuse to supply that information are probably not real buyers anyway. So, it's no loss if they walk away. Serious buyers are ready to prove funds or provide an explanation of how the deal will come together. Some brokers will also assist qualified buyers with finding financing. Brokers maintain have relationships with banks to help their sellers. For me, I am also a placement agent. So, I can help a buyer finding private capital as well. This all starts with a simple request that is easy to fulfill and starts the process for full underwriting which you have to go through anyway.

1 month ago | like reply | 0 likes

searcher from INSEAD

Letters of support from your committed investors for equity and bank term sheets for debt

1 month ago | like reply | 0 likes

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