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Best way to request proof of capital from a buyer and at what stage?

I am getting a lot of inquires, some serious, but many seem to be dreamers. I am doing a FSBO, what is appropriate and when to ask for proof of capital for selling cost. I don't want to waste my time with buyers that don't have any money or at least an appropriate down. When things move along, what is considered appropriate proof of finances? A financial statement? Should this be backed by a bank, etc?

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Answers (4)
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Premier Route Marketplace
Clackamas County, OR

We have been sell business for many years across industrial sectors.

Financial Statements are a good source if they are prepared by a 3d party, say CPA.
Many Buyers are reluctant to divulge the financial statements because it contains information not related to the ability to acquire the target business.

You can as for a letter for a CPA or Banker stating that the buyer has within its capital structure the liquidity to acquire the target.

Other options are to get redacted "blacked out account numbers", from banking accounts or broker statements. You are interest in the $$$$$$$$$$ only.

Don't be afraid to ask, if the price is $100,000 or $100,000,000 we have to asked the question.

Dennis Strand

Jul 17, 2014
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Jul 16, 2014
Douglas Batts
Murphy Business & Financial Corporation
Collin County, TX
Premium Broker

This process varies from broker to broker but I encourage my agents to require a copy of perspective buyer's financial statements along with the completed NDA before we disclose any confidential info to perspective buyers. This is the very first step in our process that is designed to ensure that we are dealing with qualified buyers. I often find that FSBOs are nervous about asking for such information but I find that it is essential in discouraging "tire kickers" from wasting your time. Very few qualified buyers will push back at this requirement.

Jun 9, 2009
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Sharp Business Opportunities
San Diego County, CA

One of the first questions a broker will ask is how much money they have to put down. This is one of the advantages of having a broker. You will save time and aggravation by having a professional help. There are steps taken to make the process flow smoothly such as getting a written offer before letting them take you down a path that waste everyone’s time. Most buyers will not put in an offer without the money or specifying they need a loan. You can ask them for proof of funds anytime but it may not be necessary if you take all the proper steps.

Jun 8, 2009