What a lender wants to see in the first meeting

The first meeting is about the buyer as much as the business

Buyers prepare for the first conversation as though it were an exam on the target's accounts. It is not. At this size the person across the table is forming a view on two things at once: whether the deal works, and whether the person proposing it has thought it through.

The second half decides more than most buyers expect. A credit paper is written by someone who met you, and the sentence in that paper about the buyer is written from this conversation. Nothing later in the process rewrites a first impression that the buyer had not done the arithmetic.

Be able to give the deal in two minutes

The single most useful preparation is a short spoken summary that covers six things without notes:

What the business does, in one plain sentence.
What you are buying: shares, the trade and assets, or a book of customers or fees.
The price, and how it is being paid: how much at completion, how much deferred, over what period, and against what.
What you are putting in yourself, and where it is coming from.
What you need to borrow, and roughly over what term.
Why you are the right person to run it afterwards.

Buyers who cannot do this are not disorganised, usually. They are further back in the process than they realise, and the conversation reveals it in about ninety seconds. Working through defining your objectives first is the cheap fix.

The questions that always come

What happens when the seller leaves? The answer needs to be specific: how long they are staying, what they are contractually obliged to do in that time, how the customer or client introductions are being handled, and what covenants restrain them afterwards. "They have agreed to help out for a bit" is not an answer.

How much of the income is contracted? Not how much is described as recurring. How much sits under an agreement with a term left to run, and how much renews because a relationship exists. Both are valuable and they are valued differently. See how lenders assess recurring revenue.

Who are the biggest customers, and how long have they been there? Concentration is normal in these businesses and is not by itself a problem, but being unable to answer is. See customer concentration.

What is your own money in this? Amount, source, and whether it is genuinely yours rather than borrowed elsewhere. See equity contribution.

What happens if it goes wrong? The right answer names the most likely thing to go wrong and says what would be done about it. A buyer who says nothing is likely to go wrong has told the room they have not looked for it.

Bring a short pack, not everything

Three years of accounts, the latest management figures, the heads of terms or the offer letter, a one-page summary of the deal structure, and a simple statement of your own position. That is enough for a first conversation.

Sending a full data room before anybody has expressed appetite is counterproductive. It buries the two or three facts that decide whether this is worth pursuing, and it invites questions about detail that has no bearing on the answer yet. The full list can wait until it is asked for, and our document checklist has it in the order it usually arrives.

What sinks a first meeting

A price with no reasoning behind it. If the only justification is that the seller asked for it, the buyer has no position to defend when the assessment comes back lower.
Not knowing the profit after paying someone to do the work. The most common single gap, and the one that most often ends the conversation politely.
Deferring everything to a third party. "My accountant has that" is fine once. Three times and the buyer looks like a passenger in their own acquisition.
Hiding the obvious problem. It will be found in diligence, and being found late costs more than the problem itself, because everything else provided then gets re-read sceptically.
An impossible timetable. Asking for completion in three weeks tells an experienced funder that nobody has explained how long this takes. See timelines.

Volunteer the weakest part

The most effective thing a buyer can do in a first meeting is name the weakest feature of the deal before anyone asks, and say what is being done about it.

It changes the conversation from a search to a discussion. It also gives the funder a fair chance to say early that this particular weakness is one they cannot work with, which saves everybody weeks. A deal that dies in the first meeting for a good reason is a better outcome than a deal that dies in credit two months later for the same reason.

Ask them things too

This is a two-way meeting and buyers under-use it. Worth asking:

Have you funded businesses in this sector before, and recently?
What normally stops a deal like this one for you?
What security would you expect, and would a personal guarantee be part of it? See personal guarantees explained.
What would your indicative timetable be from here?
What would you want to see before this goes to credit?

The answers tell you whether you are talking to someone who understands the business you are buying or someone who is about to assess it against a template built for a different kind of company.

Whose meeting this is

To be clear about roles: the meeting is with a lender or with a commercial finance broker, and the assessment, the terms and any recommendation come from them. Reads Commercial Finance is not a lender and holds no regulatory permission of its own.

What we do sits before it. We know this market and we know specific people who have funded businesses in these sectors before, so the first meeting is with someone who has already seen a deal shaped like yours rather than with whoever the search engine offered. Tell us what you are buying and we come back to you having spoken to the right people.