How to handle Proof of Funds requests in Europe?

September 11, 2025

by a searcher from IESE Business School in Madrid, España

Quick question for self-funded searchers and investors across Europe: How do you typically handle situations where the seller or advisor asks for proof of funds before signing the LOI? In particular: -What kind of documentation do you share (investor letters, sample equity commitments, etc.)? -Is this a common ask in your market? -How do you balance transparency with the fact that capital is raised post-LOI? Appreciate any insights or experiences you can share!

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Reply by a searcher
from London Business School in Germany

In my experience, this is not common. However, if you have a group of investors you communicate with regularly (e.g., sharing teasers or updates), you can ask a few of them to provide generic letters outlining who they are, how many ETA deals they’ve supported, the average investment size, etc. These letters would clearly state that there is no formal commitment until due diligence is complete and both parties have agreed on the SPA and legal terms. Once you have these letters, you can reuse them for future deals as well—they're not deal-specific and can serve as a helpful reference point in similar situations. Additionally, you can explain to the broker that part of the transaction will be financed with debt. Ideally, you should already have a shortlist of banks you intend to approach. While banks typically won’t provide letters at this stage, if the advisor is not willing to accept that explanation, then it’s likely not the right sell-side mandate for you anyway.

Reply by a searcher
in Aix-en-Provence, France

Same in France, sellers are conservative and also request types of proofs upfront.

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