The 1st Thing Banks Look At When You Apply For Funding
We recently invited Scott McGregor, Commercial Broker at Mortar Finance to a webinar on the topic, ‘Funding Your Next Business Acquisition.’
Here’s what he said -
It comes down to the management experience and their skills, the industry that they are operating their business within and who are the key people in that business. I suppose when you break that down to an acquisition, if you're buying a business that you don't have any experience in, that's going to be something the bank's going to want to understand, how that's going to work. There may be some key people within that existing business that you're going to retain through the acquisition and it's important to understand who those people are.
If the business you're buying is very reliant on the previous owner, or a sales manager, if you can't secure their services in the acquisition process, then it may have an impact on how that business is going to trade going forward. The all up understanding of the character and the ability of the applicants to buy and operate that business is going to be fundamental to the bank getting comfortable with you as an applicant for finance.
Some of the things that people do there are conditions within a contract that the previous owner will stay on for 12 months or something to help with training and upscaling to get into that business and help with the transition process. Sometimes under franchise arrangements, the franchise group will provide ongoing training and support to the new business owners to help them get comfortable with what that business is going to run once that franchise person steps away.