Case Study: Proof of Funds Letter to Break the Catch-22 on an Acquisition

Case Study: Proof of Funds Letter to Break the Catch-22 on an Acquisition

Case Study: Proof of Funds Letter to Break the Catch-22 on an Acquisition

The buyer had a signed SPA and an agreed debt term sheet, but lenders needed the seller’s green light to finalize documents. The seller demanded proof of funds before granting exclusivity and management access. Classic stalemate. We arranged a genuine bank comfort letter that showed capacity and funding mechanics without pretending money was free to spend. That was enough to unlock diligence and keep the signing timeline.

Outcome: seller accepted the proof of funds, exclusivity granted, diligence completed, and the acquisition closed on the original timetable.

Deal Snapshot

Transaction
US services company acquisition. Enterprise value about USD 22.5m. Buyer was a sponsor-owned HoldCo.
Capital stack at signing
Senior unitranche about USD 12.5m, seller rollover about 3.0m, equity about 7.0m including escrowed deposit.
Constraint
Seller required a bank letter confirming available funds and mechanics. Lender documents were still in legal review.
Deadline
Seven business days to deliver an acceptable bank comfort letter or lose the deal window.

The Catch-22 vs Our Solution

The roadblock
  • Seller wanted bank proof that funds existed and could settle at closing.
  • Lenders would not issue a final funds-flow letter before exclusivity and final diligence.
  • Buyer could not escalate management meetings without exclusivity.
What we executed
  • Set up an acquisition escrow for the deposit and part of the equity.
  • Obtained a bank comfort letter referencing escrowed equity, committed facilities, and closing conditions.
  • Coordinated a lender side readiness letter to mirror key mechanics.

What the Bank Comfort Letter Said

Issuing bank Top 50 US bank, corporate banking division, officer contact listed with phone and email
Form Proof of Funds / Bank Comfort Letter on letterhead, PDF original and couriered hard copy
Amount referenced Up to USD 19.5m available for the acquisition, combining escrowed equity plus committed debt facility, subject to conditions precedent
Scope Acknowledged receipt of USD 2.25m deposit in escrow, equity commitment letters on file, and a signed debt term sheet with stated conditions and target closing window
Validity and checks Valid for 30 days, bank officer available to verify authenticity, SWIFT verification available if requested by seller’s counsel
Legal posture Non-binding comfort. Not a guarantee of payment. References closing conditions, KYC, and drawdown mechanics

Our Process

1) Intake
Reviewed SPA, debt term sheet, equity commitments, and seller’s PoF wording. Mapped what the seller’s counsel would accept.
2) Escrow
Opened a US escrow for the deposit and part of the equity. Executed control agreements and wire proofs for the bank letter.
3) Drafting
Aligned bank language to reflect available capacity, conditions precedent, and readiness to fund on document satisfaction.
4) Verification
Provided seller counsel with bank officer details, specimen signature, and optional SWIFT verification procedure.

Timeline

Day 1
Kickoff and seller PoF requirements agreed in writing
Day 2
Escrow opened. Equity wires posted. Evidence prepared
Day 3
Bank draft issued for review. Legal markup turned same day
Day 4
Final letter signed. Officer verification shared
Day 5–7
Exclusivity granted. Diligence and credit committees proceed

Results

Metric Outcome
Seller acceptance Accepted on first submission, no further comfort requested
Exclusivity 30 day exclusivity granted within 24 hours of verification
Closing Debt documents executed in 3 weeks. Closing occurred inside the original window
Cost control No break fees. Bank letter fee and escrow costs budgeted upfront

Why This Worked

  • The letter came from a real bank officer, not a template from a shelf company.
  • It tied to documented sources and uses: escrowed equity, signed commitments, and a named facility with listed conditions.
  • Verification was easy for seller counsel. They could call the officer or request a SWIFT check.
  • The language avoided promises the bank could not make. No fake assurances. Just clear capacity and mechanics.

Deliverables

Deliverable Contents Purpose
Bank comfort letter Capacity, conditions, officer contact, validity, optional SWIFT check Satisfy seller requirement for proof of funds
Escrow confirmation Deposit receipt, control agreement, wiring instructions Demonstrate real cash committed
Lender readiness note Term sheet on file, conditions precedent list, target close window Show that debt was in late stage, not hypothetical
Closing calendar Legal milestones, diligence sessions, signing date Keep all parties on the same page
Stuck in a proof of funds stalemate. We will structure a bank letter that shows real capacity, set up escrow if needed, and coordinate lender readiness notes so the seller can say yes. We help our clients capitalize on opportunities.

Need a Genuine Proof of Funds Letter

Share the SPA status, seller PoF wording, equity sources, and debt term sheet. We will return a plan, bank route, and timeline.

Start the Process

Financely is a placement and advisory firm. We do not issue bank instruments. Any bank letter is subject to KYC and AML checks, sanctions screening, and the issuing bank’s internal approvals. A comfort letter evidences capacity and mechanics. It is not a guarantee of payment and not a commitment to lend. Terms, timing, and structure vary by counterparty and jurisdiction.

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