Matching capital to opportunity

STEP 4: Closing the Deal

Believe it or not, many finance and capital deals go sour at the eleventh hour, just before signing. This can happen for a number of reasons. But generally it is because something changed or some new information was presented that affected the terms agreed to during the negotiation process. Some typical examples are as follows:

  1. New information: One or more parties may have received information about the deal that makes it less attractive than originally thought. This is not as common during longer due diligence and negotiation processes. But it can occur in the case of a business owner/manager who is about to agree to terms that are far worse than a competing lender is willing to offer. If the business in question presents a very lucrative financial opportunity, the business owner/manager may have shopped his funding needs around and gotten a better deal at the last minute.
  2. External change: In many cases, the funding process can take time. During this time period, the market or other conditions external to the company may change dramatically. This can be positive if it involves losing a competitor through bankruptcy or acquiring a large new customer. Or it can be negative if it involves a huge swing in the price of certain raw materials required in manufacturing or the loss of a supplier of major customer.
  3. Internal change: A company may be undergoing restructuring as a part of its financial plan. With any change can come decreased morale or a loss of key employees. In some cases, this loss can also entail a loss of knowledge vital to the company (especially those companies involved in R&D or product development). Internal change can also involve the loss of a key resource such as a manufacturing facility burnt down in a fire.
  4. Cold feet: Business deals are done between people. In some cases, despite all the due diligence and good intentions, a deal can fall apart simply because one party is unwilling or unable to commit. This is less common as it is usually determined earlier on in the process how willing and committed both parties are.

There are many more reasons why a finance or capital arrangement might fall apart. Our representatives are able to help diagnose these warning signs and ensure a deal moves ahead smoothly and efficiently for both parties. Contact us today to learn more.

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Feel free to contact us to learn more about how capital structure can benefit your business, as well as the various sources of capital and how each can be used.

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