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Frequently Asked Questions

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How long does it take Lexington to find funding for a client?

As a general rule, the more proven the business model, the more visible the earnings, the greater the management depth and cash-flow generation will determine the timing and success of the funding effort. Also, the size of the transaction and the type of financing typically will matter in the timeline of a successful completion. While not scientific, some transactions can close in as little as 75 days, but more typically closings range between 16 - 20 weeks. Most companies vastly underestimate the time commitment necessary to successfully complete a financing. In actuality, a company seeking financing needs to budget between 500 to 1000 work-hours to the capital-raising process.

It is important to note that most institutional investors and lenders are heavily reliant upon a due diligence process and the client company providing timely and accurate information. Traditional due diligence is primarily a legal and financial process designed to verify representations, steer clear of risks, stay out of litigation, establish a valuation and set a price for a transaction. A company needs to be ready for the financial, legal, business, technical and other verifications sought by a prospective buyer or investor. Otherwise, the company may unnecessarily delay the investment process and risk sending a message to the private equity investor that the company is unorganized or incapable of maintaining the records, resources, materials and other processes necessary to provide an accurate picture of its affairs.

Rather than waiting to receive the buyer’s due diligence checklist, a proactive company might solicit a due diligence list from its own counsel, and then start collecting the required information, preparing the necessary materials, and strategizing about how the buyer’s / investor’s due diligence could effectively and efficiently be completed.