Is asking for "Proof of Funds" Normal?

by a searcher from Anderson University

1 year ago

It is NOT normal for truly experienced business brokers. Selling a business is not that black and white. This hurts the seller, who will most likely never sell their business. 

The broker who asks for "proof of funds" is just trying to cash out. In most of their NDA's they state that they have not even verified the business data. When they ask me for "proof of funds", I ask for "Proof of Financial Data." 

Really, I just move on to the next acquisition target. Remember, there are plenty of small businesses you can ethically acquire without a broker and let the seller keep that broker fee they would have paid.

3 likes
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20 comments

searcher

As stated above, it varies based on the markets, sellers, and brokers, but definitely it's not unusual.

5 months ago | like reply | 0 likes

searcher from University of South Carolina - Darla Moore School of Business

If they ask early on, I usually just give them a copy of my latest bank statement. Most during the LOI want to see something, especially before giving you exclusivity on the deal. If I were a broker, I'd probably do the same to be sure i'm dealing with a credible buyer. I'm not a broker, but I know they can get dozens of inquiries a day on their deals, and I think they find that more than half are tire kickers so to speak.

5 months ago | like reply | 0 likes

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