There is a common instinct when raising capital: send the project to as many lenders as possible and see who bites. It feels like it increases the odds. In practice, it often does the opposite.
How a good deal goes stale
When a project circulates for months across dozens of offices, lenders notice. A transaction that has been seen everywhere and closed nowhere raises a question in every new reviewer’s mind: what is wrong with it?
If you lose to one guy and you’ve got to bring it to the next, he’s going to see that you’ve already tried this already and there’s some sort of problem attached to it.
Justin Madoff, Chief Operating Officer
That perception can attach to any asset, no matter how well located or well planned. Once a deal is labeled as shopped, it is hard to reposition.
Fix it before the market sees it
The better approach is to find the weaknesses before any capital provider does. That means scrubbing the numbers, resolving regulatory and approval questions, looking for incentives or abatements that improve the economics, and presenting the transaction in its best honest light.
If we find it and we get rid of it, help it along, massage it over, then by the time the money sees it, they’re saying, okay, this is not a bad deal.
Marco Howington, President and Co-Founder
Transparency is part of the preparation
None of this works without candor from the sponsor. Issues that surface late in underwriting do far more damage than issues disclosed at the start. Or, in Marco’s words, money hates lies.
A focused process with the right counterparties, run once and run well, protects both the terms and the reputation of the project. Contact us to discuss how to take a transaction to market.