Proof of Funds

October 10, 2024

by a searcher from Baruch College-The City University of New York - The Zicklin School of Business in Brooklyn, NY, USA

Hi All,

Beginner searcher here. I'm trying to obtain a CIM from a broker to get more details on a listing but he is gatekeeping until I provide proof of funds. A few investors I've spoken too would be interested once I go under LOI but I can't get there without further analyzing the CIM and speaking with the seller. Any recommendations on how to proceed here ? Or should I obtain committed capital before trying to get more information from brokers?

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Reply by an intermediary
from Southern Methodist University in Fort Lauderdale, FL, USA

I don't have a dog in this fight but as a sell-side advisor, the absolute last thing in the world I want is a buyer in this situation trying to lock my client into exclusivity and then shopping the deal to investors. This is a great way to get fired. Instead, get your capital committed, then come prepared with proof of funds. You'll probably save yourself a lot of time in the process because you'll find out which investors are real, and which aren't. As the saying goes, "talk is cheap."

Happy hunting out there.

Reply by a searcher
from University of Maryland at College Park in Annapolis, MD, USA

Generally if you cannot get a CIM without a proof of funds, I would just move. In the vast majority of cases your POF roadblock comes when you have submitted your LOI. Unless there is something very special about the deal, there will be lots of other opportunities where the preliminary data is available for review. Meanwhile, try to secure soft commitments from investors who align with your vision, and build credibility in other ways. For example, an exceptional internal team and outside advisors, professional quality modeling and decks, and a clean and professional website.

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