Eight Tips to Get You to Closing

During my years as a commercial real estate broker, banker and business consultant, I've seen deals and financings fall apart when they shouldn't have. The reasons usually are basic - what legendary football coach Lou Holtz calls "blocking and tackling." To maximize the odds of getting your deal done:

Don't Try to Teach a Pig to Sing

"You'll only frustrate yourself and irritate the pig," as my former boss used to say. If you are looking for financing, find a lender that specializes in loans of the type you seek. If you are looking for a buyer, look for persons or entities most likely to make investments of the type you offer. Resist the temptation to try fitting a square peg in a round hole. Hard-selling rarely overcomes a poor fit. And if the deal closes, the odds of it being a mutually successful relationship are diminished.

Be Prepared

If you want to get off to a bad start, show up at the first meeting unprepared. Carelessness communicates that you run your business sloppily. In the case of debt financing, you should have in hand, and be ready to discuss:

• Description of your business, including its history, what you do and how you do it
• Summary of your request and why the money is needed
• Income statements and balance sheets for the past three years, plus year-to-date
• Projections for the next year or two, including cash flow
• How the loan will be repaid - both primary and secondary sources
• Personal financial statement

For owners of closely held businesses, personal guarantees normally are required by lenders. Bring a personal financial statement to the meeting and you'll make a very strong first impression.

Follow Up

If in your initial meeting the lender or investor requests additional information, send it promptly. If it will take you some time to gather the requested data, tell him how long. Confirm in writing what you will do and when you will do it. Then be sure to do as you say. You will establish credibility and communicate that you will be a good customer. Moreover, the parties will be more likely to mirror your professionalism and promptness.

Get Good Advice

We all have heard that lawyers kill deals. They can make them, too. Get good advice and you will maximize the chances that a good deal gets done for you. Good advice primarily comes from experience. Find counsel that is experienced in the type of deal you are working on.

Be Realistic

Before you start spending time and money, be realistic as to whether the deal you are buying or selling has merit. Will the cash flow work with realistic projections of income and expense? Do the equity amount, collateral and cash flow coverage fall within acceptable norms? Don't be overly optimistic because you unwittingly may be sticking a pin in your own balloon. This can be particularly true near the closing date, when the lender asks you for an actual vs. budget comparison, with the figures you provided when talks began.

Move Swiftly

Time kills deals. If you really want to get your deal done, move swiftly. Don't expect that you can take a vacation during negotiations and have everyone still excited when you return. Have you ever heard of the pendulum theory? The pendulum never stands still. It is either moving forward or backward. Your deal is either moving forward or backward. Your time, energy and diligence will keep it moving forward.

Give Them What They Want

No, don't give away the farm. Listen to comments, concerns and requirements of the other party. Ask questions to understand not just what they say but what they really mean. Then address their needs. Whether you seek financing, a buyer or investor, resist the temptation to respond to objections by selling harder. Instead, address the other party's concerns and figure out how your deal can be presented in a way that addresses their needs and concerns.

Negotiate and Compromise

Negotiating any deal is give and take. Don't expect everything to go your way. Know the market, give yourself room, and accept that you have to compromise. An unreasonable request without a valid basis kills deals and destroys your credibility. Also, keep in mind that your opportunity will not be their only opportunity. Make sure yours is a win-win.

Adhere to the above and you'll maximize the chance that your next deal will get done.