Resources
What a lender will ask you for
Roughly in the order it gets asked for. Every lender's list differs a little, and the core of it does not.
Having this ready before anyone asks is the single cheapest thing a buyer can do to shorten a deal. It is also the clearest signal you can send that you know what you are doing, which matters more than most buyers expect.
First
About the business you are buying
This is the part that decides whether there is a deal at all, so it comes first and it gets read hardest.
- Three years of statutory accounts. Filed accounts for the target, plus the notes.
- Current management accounts. Ideally monthly, with a balance sheet, not just a profit figure. Expect them to be reconciled back to the last filed accounts.
- Revenue analysis. Split by type: contracted and recurring, versus one-off or project. This single table changes the valuation and the funding more than any other document.
- Customer or client list by value. With tenure, and the top ten identified. This is how customer concentration gets tested.
- Contract schedule. Value, start date, renewal or expiry, notice period, and whether there is a change of control clause.
- Debtor and creditor ageing. Plus work in progress and retentions where the business has them.
- Staff list. Roles, salaries, length of service, qualifications, and who is critical.
Second
About you, and about the deal
- Heads of terms. Even in draft. A lender wants to see the structure, not just the price. See heads of terms.
- How the price is being paid. Cash at completion, deferred, earn-out, vendor finance, and on what dates. See deferred consideration and earn-outs.
- Your equity contribution and where it comes from. See equity contribution.
- Your own accounts, if you already run a business, for the same three-year period.
- Personal financial position. Assets, liabilities and income. Expected wherever a personal guarantee is in play.
- Your CV, and your management team's. Sector experience carries real weight, particularly for a first-time buyer.
- The company you are buying through. Registration details for the acquiring company or NewCo, and its ownership.
Third
The forward view
This is where most first-time buyers lose time, because it has to be built rather than gathered.
- Integrated financial forecast. Profit and loss, balance sheet and cash flow, monthly for the first year and at least annually after that. It has to include the debt you are asking for and show it being serviced.
- The assumptions behind it, written down. A forecast without stated assumptions cannot be tested, and a lender will not take it seriously.
- A downside case. What happens if a proportion of revenue leaves. Producing this yourself, before you are asked, is one of the few things that visibly changes how a lender reads a proposal.
- Integration plan. Who does the seller's job after completion, and what it costs. This is the adjustment that turns a headline profit figure into the one debt is serviced from.
Fourth
Legal, compliance and sector-specific
- Property leases, or title documents where premises are owned.
- Insurance, including professional indemnity and any run-off arrangement.
- Accreditations, licences and scheme registrations, with the renewal dates and the name they are held in.
- Any live disputes, claims or regulatory correspondence.
- Asset register, and existing finance agreements on anything.
- Pension arrangements and any employment liabilities transferring with staff.
The sector pages set out what is specific to each one: accountancy practices, HVAC, fire and security, pest control, electrical and M&E and facilities management.
Worth knowing
Three things about the pack itself
Gaps are better disclosed than discovered. If something does not exist, say so. A lender that finds it later re-reads everything else you gave them in a different light.
Consistency matters more than polish. The fee schedule, the accounts and the forecast should tell the same story. Where they do not, explain why before you are asked.
You will be asked for it more than once. Different lenders want different cuts of the same information. Keeping it in one organised place is worth the hour it takes.
The list above is the general case. What a particular lender asks for depends on who they are, and that is the part we can shorten: we know this market and we know specific people who have funded a business like yours before, so we can tell you what that lender will actually want before you assemble it twice.
What a lender then does with all of it is covered in what a lender does with your management accounts and what lenders look for.
Got the pack together? Tell us what you are buying
A buyer who can produce this without a three week delay is a different proposition. When you have it, tell us the sector and the shape of the deal.