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Who can help me evaluate buyer financing before accepting an offer in Texas?
Who checks whether a buyer can really pay, what proof to ask for, and how each type of financing changes the risk you carry.
By Michael D. Rubin, CEO & Founder · September 2026 · 938 words
Your M&A advisor should evaluate a buyer's financing before you accept an offer, working with your transaction attorney and CPA; a lender's letter or proof of funds is the evidence, and the advisor's job is to test it. An offer is only worth what the buyer can close on. A high price from a buyer who cannot fund it is worse than a lower one from a buyer who can, because it takes your company off the market while the deal fails.
Here is who does what, the questions to ask, and how each kind of financing shifts risk onto you.
Who does what
- M&A advisor. Screens buyers before they see any detail, asks how each offer will be funded, compares financing across offers, and speaks with lenders or equity sources when needed.
- Transaction attorney. Writes the protections into the letter of intent and purchase agreement: financing deadlines, what happens if the buyer's loan falls through, and your rights if a seller note is not paid.
- CPA. Explains how the structure affects your taxes. Installment payments and earnouts can be taxed differently from cash at closing, and your CPA decides the treatment.
- Your own banker, optionally. Can sometimes give a read on a lender you have not heard of.
The main ways buyers pay, and what to check
A seller note is part of the price you receive over time, with interest, which makes you a lender to the buyer. An earnout is part of the price paid later only if the company hits agreed targets. Both appear often in deals of this size.
| Financing type | What to verify | Risk to you |
|---|---|---|
| Cash or investor equity | Bank or brokerage statements, or a commitment letter from the fund or investors | Low once verified; ask whether investor approval is still pending |
| SBA loan | Lender prequalification, the buyer's credit and cash for the down payment | Moderate; approval takes time and lenders may want part of the price as a seller note |
| Conventional bank loan | A term sheet from a named lender and the conditions still open | Moderate; conditions can change after due diligence |
| Seller note | The buyer's financial strength, security, personal guarantee, and where you rank behind the bank | You carry the credit risk of the new owner |
| Earnout | How the target is measured, who controls the accounting, the time period | Part of your price depends on results you no longer control |
Questions to ask before you accept
- How much of the price is cash at closing, and exactly where does that cash come from?
- Has a named lender reviewed this specific deal, or only the buyer's general profile?
- How much of the buyer's own money is going in? A buyer with real money at risk behaves differently.
- If the loan is not approved by a set date, can I walk away and return to other buyers?
- If part of the price is a seller note, what secures it, and does the bank get paid first?
- Has this buyer closed acquisitions before, and can we confirm that with someone?
Warning signs in a buyer's financing
- The buyer will not complete a financial profile or show proof of funds until after you sign a letter of intent.
- The financing section of the offer is vague, such as subject to financing, with no lender named and no timetable.
- The buyer will not say where the down payment is coming from.
- The buyer wants a long exclusivity period, and the reason is finding money rather than checking your company.
- The headline price is high, but most of it is an earnout or a seller note.
- The buyer tries to reopen the price after its lender's review, without any new facts about the business.
Why the check starts before the offer
The best time to evaluate financing is before a buyer ever learns your company's name. At MDR & Associates every buyer registers, signs a confidentiality agreement and completes a financial profile showing they can fund the purchase before receiving any detail. That removes most unfunded buyers early. When letters of intent arrive, the financing section is compared side by side with price, because two offers at the same price can carry very different risk.
Financing also shapes the structure of an offer. Lenders set their own conditions, including how much of the buyer's own cash must go in and whether part of the price must be deferred to you, so an individual buyer's offer is often built around what its bank will allow. A private equity buyer may rely on a loan to the company after closing. For each offer, your advisor should tell you whose approval is still outstanding, what that party will want to see, and how long it normally takes. Lenders usually want the tax returns, the recast and a draft purchase agreement before final approval, so the loan process and due diligence run side by side.
Our guide to comparing offers walks through that comparison, and why sales fall apart in due diligence explains what happens when financing was assumed rather than confirmed.
What we do in that situation
MDR & Associates represents Texas owners on the sell side and can arrange SBA, conventional and seller-financed structures, described on our business financing page. A principal of the firm is in every negotiation, and we present every offer to you in person, together with our view of the buyer's ability to close. You accept, reject or counter. Each of those steps is laid out in our process. If you already have an offer and want a second opinion on the financing behind it, contact us and we will review it confidentially.
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