Bankers Are Your Friends and Partners

Although most people don’t like debt, it is critical in most cases to enable a buyer to purchase a business. There are plenty of benefits to using a bank’s money too:

• It allows a buyer to acquire a bigger and better business.
• The bank is taking on some of the risk, and
• The returns on invested capital should be outstanding.

Since a bank is needed to acquire a business, that banker is now going to be your “partner” in the venture. They are taking on a substantial amount of risk and want to make sure their new partner is going to be a good partner. The bank will want to know that their potential new partner has a thorough understanding of the business they want to buy, the industry they are about to enter, the trends, opportunities, challenges, etc.

So, in preparing for a loan, the buyer will need to write a short business plan and have a 2 to 3 year projection of the business after acquisition. This isn’t a difficult process, but will take some effort and thought. There will probably be an interview with the loan officer and maybe the bank credit underwriter. Remember interviewing for a job? This interview will be similar in that it’s not a time to be glib, rude, arrogant, or indifferent. Bankers have feelings too!

The buyer needs to show passion for the business, knowledge of the industry, and interest in growing the business.  The seller will be able to educate the buyer about the details of the business and industry trends, and where to go for additional data if necessary. There are plenty of professionals that can also assist in the process and your Apex Business Advisor can steer you in the right direction.