Catch 22: Investors want LOI first, Broker wants proof of funds

investor profile

February 09, 2022

by an investor from New York University in St. Louis Metropolitan Area, USA

I am a self-funded searcher. Investors tell me to contact them when I have a deal under LOI. What do I do when the broker won't share the OM without proof of funds? It's a catch 22. I am interested in $17 million listing but she won't share it without first getting proof that I have raised the money.

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commentor profile
Reply by a professional
from University of Southern California in North Palm Beach, FL, USA
Brokers/owners/sellers say “show me your money” because they can (and probably should###-###-#### thanks to business buyer competition. You’ll have to present, better than other searchers, whatever else you bring to the dealmaking table. DM me if you want tips.

BTW, we’re going to cover your topic with our panel of experts, February 24, Zoom. (Legal, dealmaking, sourcing, brokerage and more.) We'll talk reality, about what we’re seeing, experiencing. And what we can do to increase our opportunity and mitigate our risks.

Advance register now. I'm limiting the attendees so everyone has the opportunity to participate. Click the link to calendar this Zoom meeting. You will receive a confirmation email containing information about joining the meeting, which you will use on the day/time for the meeting: February 24, Thursday, 11 a.m. eastern. https://us02web.zoom.us/meeting/register/tZMpduygrjoiH9LMbL7d27LMtoyH93UBB6cm
commentor profile
Reply by a searcher
from University of Southern California in Orange County, CA, USA
If you have good relationships with your potential investors you could potentially ask them for letters indicating their interest/commitment to invest in an acquisition sponsored by you. But the reality is, while it's a catch 22 for you, that is not the case for other potential buyers in the market who have committed capital. It's difficult to compete for a business in that type of situation, particularly when there is an intermediary involved who prefers to avoid fundless sponsors.
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