Using the company's existing banking relationships to finance the acquisition

searcher profile

July 23, 2024

by a searcher from University of Virginia-Darden - Darden School of Business in New York, NY, USA

Currently looking into a business with revenue streams from creditworthy customers and solid existing banking relationships.

There are some interesting non-SBA options, from traditional lenders to SBIC. I would like to get the perspectives of others with experience engaging with a company's existing banking relationships to finance the acquisition of the company.

As a side note, I am also open to connect with more SBIC lenders.


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commentor profile
Reply by a lender
from Northwestern University in Chicago, IL, USA
Absolutely you should have the incumbent bank in your consideration set, and they'll be motivated to not lose the asset. You might also pick up on a detail or two from those already experienced with underwriting the exact company you're looking to acquire.

Of course, more likely than not the incumbent will balk if you're looking to maximize leverage. What was a fit for the seller's cap structure and ambitions is not going to match yours.
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Reply by an intermediary
from Southeastern Oklahoma State University in Las Vegas, NV, USA
From a sheer banking perspective, it shouldn't be an issue. They mitigate risks because of the different parties involved in the transaction. I haven't personally been a part of a transaction like that, but I'll ask around my firm to see if I can provide some anecdotal knowledge.
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