An ounce of prevention is better than a pound cure.

Sell-Side M&A Lending Consulting

Loan Advisors to Selling Advisors

  • Sell-Side Perspective on Buy-Side Financing for Acquisition and Equity Buy-Outs/Buy-Ins.

  • Avoiding “pretend buyers” who can’t qualify for external financing or the amount agreed.

  • How to keep your financials confidential from every interested buyer until you know their financials are strong enough to afford buying out yours.

  • What sellers need to know about the lender’s Subordination Letter.

  • How the buyer’s loan directly impacts the seller and allowable deal and seller financing structures.

  • The ins and outs of seller notes and escrow backend payment structures.

  • Which loan programs such as SBA, Tri-Party, and Conventional allow the acquisition structure, terms, and timelines you are seeking.

  • How the external lenders view earn outs and view claw backs.

Lending Navigation

Prevent M&A Deals From Going A Stray

AdvisorLoans navigates lending aspects of advisor M&A.

The expanding external financing access for advisors has contributed to today’s “seller’s market.”

While there are a lot of buyers out there looking, the vast majority haven’t taken the time to prequalify for external financing.

Most first-time buyers doesn’t know for sure if they can qualify for a Conventional loan, a SBA loan, or a loan at all.

Most sellers and first-time buyers doesn’t have a clear understanding of how the various loan programs and lenders will directly impact how buyers and sellers can structure  acquisition or equity buy-out or buy-in deals.

M&A deals can implode in the end when lending due diligence isn’t done in the beginning.

Utilize AdvisorLoans to navigate the loan programs and lender requirements and restrictions that directly impact buy-sell agreements, seller notes, and timelines.

Sell-Side Lending Navigation

  • Determining the Loan Program Options available for your deal structure

  • Establish Loan Program(s) Requirements to your Buyers

  • Financial Screening & Buyer Pre-qualification

Free assistance to sellers, buyers, and sell-side/buy-side vendor consultants.

Preventing Lending M&A Requirements from Preventing Your Deal Structure

Since loan programs dictate the M&A deal structure, sellers should dictate the loan program

External financing is likely to play a key role in your buyer’s ability to finance the acquisition of your practice or with a junior partner buying out the equity of the senior principal. 

Your buyer is likely going use one of these loan programs: Conventional, Tri-Party, or the SBA Program. Each one has requirements and restrictions in the kind of acquisition or equity buyout structures for the loan to qualify.

While sellers and buyers have a lot of flexibility in how a deal is structured, if financing is needed, the flexibility can’t expand beyond the allowable limits of the specific loan program and lender.

AdvisorLoans works with sellers and their sell-side consultants to match which loan programs or lenders will be needed to match the structure sellers tell us they are looking for.

Matching your desired structure with the right Loan Program

The deal structure sellers develop have a direct impact on the lending options the buyer would need to select and qualify for.

Seller may be looking to stay on after the sell for longer than 12 months, would like to sell equity in tranches to their junior partner over time, maintain some ongoing level of equity, have seller note and claw backs preferences, or would like to sell and receive a down payment and an have earn out structure over years.

In all these cases, Conventional, Tri-Party and SBA a have different rules. If a specific loan program doesn’t allow for the structure sellers are looking for then they should dictate that their potential buyer’s qualify for the loan program does allow for the deal structure.

Potential Buyers need to qualify for the right Loan Program

The SBA program doesn’t allow for:

Partial equity buy-outs and buy-ins

Earn out structures for years

Seller to stay on for more than 12 months after the sale

The Conventional program allows for all of the above.

Conventional and SBA have different qualifying criteria. If your buyer can only qualify for an SBA loan but can’t qualify for a Conventional loan, then this should be screened at the beginning of the process instead of at the end.

AdvisorLoans can help the seller and buyer determine early in the process the likelihood of qualifying for both the loan programs available and the various lenders specific requirements.

Financial Screening & Buyer Pre-qualification

Avoiding Pretend Buyers

Based upon the desired M&A deal structure and terms, there may be one or more programs that will be available. There are enough buyers in the market for sellers to go too far down the path with a buyers who can’t qualify for the loan program needed.

While there are a lot of buyers out there looking, the vast majority haven’t taken the time to prequalify for external financing. Most first-time buyers don’t know if they can qualify for a conventional loan, a SBA loan, or a loan at all.

Just because a “larger producer” is looking at your practice, it doesn’t mean they would automatically qualify for a loan, or have the necessary cash on hand. Some advisors in growth mode have extra downward pressures on their cash flow, or are now leveraged from previous acquisitions, to the point they don’t have the needed debt service coverage ratio required to qualify for a conventional loan, or even a SBA loan at the present time.

 If you’re considering selling your practice, evaluating only buyers who are both able to afford your acquisition and can qualify for the loan program and lender needed, is a good protection of your time. AdvisorLoans provides pre-qualification of the buyer’s ability to do both.

Pre-Qualifying Buyers

AdvisorLoans makes the process a whole lot easier for sellers and their sell-side consultants by pre-qualifying potential buyers against the underwriting criteria of the lending program needed.

We sign an NDA with the seller and the seller uploads their financials into our secure portal. Then sellers or sell-side consultants direct the potential buyer to AdvisorLoans for pre-qualification.

This prevents the seller from disclosing their financials to every interested buyer before knowing if the buyer’s financials are strong enough to qualify first.

AdvisorLoans analyzes the combined cash flow, add backs, buyer credit strength, identifies red flags, and evaluates the likelihood of the buyer qualifying and successfully  getting underwritten for either Conventional, Tri-Party, or SBA programs, and then specifically for the lenders within these programs.

When a buyer passes the AdvisorLoans screening, then the seller can provide their financials to the prospective buyer. AdvisorLoans will then be poised to navigate the loan process with the lender when the buyer and seller come to a final agreement.

We Help Sellers Pre-Qualify Buyers

Selling your practice? Use AdvisorLoans to pre-qualify your buyer(s) candidate’s ability to pay for it.

Depending on the industry source, there may be 30 to 50 interested buyers for every available practice for sale. Some broker dealers and third party firms have hundreds of advisors looking to acquire a book of business that they are trying to find sellers for.

However, while there are a lot of buyers out there looking, most of them aren’t currently prepared to acquire and even a smaller percentage have already taken the steps to pre-qualify for financing. 

Just because a “larger producer” is looking at your practice, it doesn’t mean they would automatically qualify for a loan or have the necessary cash on hand. Some advisors in heavy acquisition mode are now leveraged from previous acquisitions, to the point they are not able to secure another loan for a year, or two, or three.

If you’re considering selling your practice, evaluating only advisor buyers who are pre-qualified to afford your acquisition is a good protection of your time. After the evaluation, determine which pre-qualified buyers are the best match from a personality, investment and service philosophy, and cultural perspective.

Providing Industry M&A Lending Support

How AdvisorLoans Gets Paid

AdvisorLoans services are totally free. So how do we make money?

When a loan is closed, the lender either reimburses us for loan packaging costs and analysis, or will pay us an allocation from their business development or marketing budgets. There are no extra loan costs associated with using AdvisorLoans than dealing with lenders direct. Our consulting, advice and expert recommendations are reserved for clients who utilize us for loan packing the lending process navigation.

Support to Sell-Side and Buy-Side Consultants

AdvisorLoans supports Sell-Side and Buy-Side Consultants with helping you help your clients get the deal closed through financing foresight, planning, and efficient lending process navigation.

We exclusively focus on the lending aspects of Sell-Side and Buy-Side deal construction and financing. To avoid any conflicts wit our Loan Advisor model, we do not charge buyers, sellers, or consulting firms for our services and we also do not pay a kickback or commission for referrals. AdvisorLoans as an open architecture of lenders and programs available and isn’t a Loan Officer (Sales Person) just representing a single proprietary bank. We know how to get creative, and when workarounds and exceptions can be applied. 

Support to Enterprise M&A team and field leadership

Call AdvisorLoans to assist your retiring advisors with prequalifying your internal advisors who are seeking to grow through acquisitions.

We’ll help your selling and succession advisors determine which lending program options allow for their desired succession and retirement strategies and help your advisors get qualified for those specific programs and lenders.  AdvisorLoans assists broker dealers, custodians,  and firms with smooth and efficient financing of the transitioning of assets from the retiring advisors to your growth advisors.