Secure Surety Credit Prior to Construction Acquisition
When buying a construction business, it is critical to have a surety credit facility ready to go. The acquiring company –- and its surety representative –- must have a strong understanding of the information required by underwriters to obtain the best terms available. In addition to financial reports, bond underwriters will typically want to see evidence of a strong business plan, experienced leadership with a track record of success, and existing commitments. Put your best foot forward by providing your surety underwriter with the following items, and be ready to respond to any requests for additional detail in these areas.
• Three prior years of financial results
• Work-in-progress reports
• A detailed description of the contractor's ten largest contracts
• Five-year pro forma projections
• Legal entity organization structure
• Credit agreements
• Business plan
• Information on the leadership team (including succession plan)
• Board members
• Indemnity agreement(s) for target company
• Schedule of bonds in force
This tip was offered in the "Managing Surety Considerations for Ownership Transitions"