Our supplier credit terms and historical business loans are somewhat informal. How do we address our corporate credit readiness during our exit runway to prevent institutional lenders from blocking a deal?

Question

Tyler Smith · Accepted Answer

Institutional lenders play a major role in acquisition transactions because most buyers use debt to finance the purchase. If your business has a weak or informal credit profile, it can delay underwriting, force the buyer to seek more equity, or cause the entire deal to collapse.

To prevent credit friction, you must align your business with the Credit component of the Step by Step Exit Business Integrated Readiness framework. Start by auditing all existing liabilities, supplier agreements, and lines of credit. Clean up any informal financing arrangements and replace them with institutional debt structures.

Ensure your company has a strong, independent corporate credit profile that is not solely reliant on your personal guarantee. Work to establish clean payment histories with your primary vendors and report those terms to major credit bureaus.

By proactively building a robust credit profile during your exit runway, you make your company highly creditworthy in the eyes of acquisition lenders. This preparation reassures buyers that they can easily secure competitive acquisition financing, keeping your transaction on track and maximizing your leverage during negotiations.