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Day 5 – Funders’ Wish List

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Whether you’re buying or selling a business, understanding the expectations of any potential funders will ensure the transaction completes as smoothly and quickly as possible.

“Selling or buying an established business can have lots of positives and if you want to increase your chances of a successful sale it’s worth understanding what potential funders are looking for, whether you’re buying or selling. By keeping in mind what’s on the potential funder’s ‘wish list’ you’ll have the best chances of success,”

Chris Griffiths, New Investments Fund Manager, and succession expert at Finance Wales explains.

  1. A strong management team

Will the business be in good hands going forward? Demonstrating that there’s a planned handover to a strong management team will boost potential funders’ confidence.

  1. Robust and reliable management information

Up-to-date management information will inspire confidence. By putting effective financial and operational processes in place it can help improve efficiency and control costs.

  1. Formal contractual arrangements

Potential funders will want to know that you’ve agreed contractual terms with all customers and suppliers and that they’ll be unaffected by the sale of the business.

  1. Profitability and cash generation

Any change of ownership is likely to increase a business’ debt levels, so potential funders will be looking for a solid track record of cash generation.

  1. Order book and future revenues

A strong order book will help to convince potential funders that the business will be starting in a strong position under new ownership.

  1. Existing debt levels

Potential funders are unlikely to back a transaction if a business already has high debt levels.

  1. Vendor flexibility

Increasingly, vendors are being expected to agree a deferred consideration to help fund a transaction, demonstrating their confidence in the business and its future success.

Finance Wales has a range of funding for small and medium-sized businesses including a specialist £25 million fund, The Wales Succession Management Fund to help Welsh managers and management teams buy established Welsh small and medium-sized businesses (SMEs). 

To find out more about how we can help contact us.

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The Development Bank of Wales exists to help businesses in Wales start up, strengthen and grow, by getting them the capital they need across a range of routes.

As a unique resource in Wales, we offer flexible finance to all businesses at all stages, with funds available from £1,000 to £10million.

Our teams of friendly and dedicated staff all across Wales are on hand to provide guidance on the right investment and support for your business, and can provide the local insight which we know business owners value.

We’re one of the top five institutional venture capital investors in the UK by volume, with more than £100m invested in tech businesses.

We also work alongside partner organisations like Business Wales, and offers co-investment alongside banks, crowd funders, grants, private and corporate investors and other lenders.

And we’re committed to helping Welsh businesses improve their sustainability and achieving net-zero goals, helping them to transition to Wales’ green business future.

For more information, visit the Development Bank website at www.developmentbank.wales to find out more.

 

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