{M&A Process/7} Prearranged financing

Whenever we can, we work with lenders to obtain a pre-arranged financing package for potential buyers.

Having so-called "stapled financing" in place makes the business more attractive to potential buyers:

▶1/ It shows the business is financeable in a broad sense.

▶2/ A specific lender likes the transaction and the loan.

▶3/ A third party with a vested interest in the business's financial performance has done some vetting.*

We include the prearranged financing as a supplement to the CIM. {This is the origin of the term "stapled financing" - it's stapled to the CIM or other marketing book.}

Buyers are, of course, always free to obtain their own financing.

*To be clear, prearranged financing often doesn't involve a detailed examination of the target. That can vary depending on deal size and complexity, but buyers should view the staple as a starting point for considering financing options, not the only avenue. Of course, many buyers do end up using the featured lender, which was likely tapped for a reason, but they should make that choice after shopping the deal. Also, we generally caution clients that they don't really know financing is in place until the wires are received.