Acquiring a Distressed Franchise - Question regarding switching bank accounts

June 12, 2024

by a searcher from University of Richmond in Richmond, VA, USA

A member of the Veteran ETA community is under LOI for the acquisition of a distressed franchise. The franchisor is insistent on closing down the bank account at close. Does anyone have experience with how to ensure a successful transition post-close? He's concerned with customer payment issues. Plans on setting up a bank account ahead of time and then opening up a new account for the LLC being acquired immediately upon close. If you are able to connect with him, let me know and I can put you in touch. Thanks!

0 Likes

12 Replies

112 Views

Replies

Reply by a searcher
from Georgetown University in District of Columbia, USA

Depends on how payments are processed, either way it would be unusual to maintain the same bank account especially since this is likely an asset sale. I imagine because it’s a franchise, they have a preferred software provider that processes all transactions. Part of the transition will be notifying the provider of the sale pre close, scheduling a switch date, and then confirming with the provider that the deal closed. Then in post close, clean up any transactions that weren’t processed correctly, if necessary.

DM me if you’re interested in hearing more. Not a franchise, but I’ve been through this process before.

Reply by a professional
in San Francisco, CA, USA

Transitioning the financial aspects of an acquisition, especially for a distressed franchise, can be complex but manageable with careful planning. It entails carefully notifying current customers on the change, the new account for LLC is there and perform a detailed reconciliation of the old bank account and the new bank account to ensure all outstanding payments and receivables are accounted for.- let me know if you need support for bookkeeping post close and I can help :)

+10 more replies.

Join the discussion