In this issue of the M&A Nuggets, M“B”A stands for mergers (with Banker) and acquisitions. It is important that the purchaser involves its lender in the acquisition process early on, especially if the transaction is to be financed. It is crucial to understand upfront whether your lender has an appetite for financing an acquisition. The purchaser should discuss the estimated value of the transaction and amount of financing being sought with the lender, and understand the valuation metrics the lender will look at to determine whether to finance the deal. Although the purchaser may not believe there is a need for an appraisal, the lender may require it. Any additional requirements that the lender will impose, such as added collateral and/or guarantees, should be understood. The lender will also likely need to be involved throughout the purchase process, as other issues, such as the priority of the lender’s lien and subordination of other lenders, may arise. The recommendation here is to have the conversation with the lender sooner rather than later in the process.
ABOUT GLENN D. SOLOMON
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Glenn D. Solomon is a principal at Offit Kurman and has provided counsel to businesses and business owners for more than twenty-five years. He has extensive experience in the purchase and sale of businesses, structuring ownership agreements, and advising companies in financial distress.
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