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.