Proof of funds, explained

Written for people buying a privately held business, by a firm that brokers them. What brokers ask for and why, what each form of proof actually demonstrates, and how to answer without handing over more of your financial life than the question requires.

• Proof of funds for buying a business: what brokers actually want

  What a business broker means by proof of funds, what they accept, when they ask for it, and how to send it without exposing more than you need to.

• Do you have to send a business broker your bank statements?

  No. A broker needs to know you can pay, not what you spend. What they are entitled to ask for, and what to send instead.

• Does showing proof of funds hurt your negotiating position?

  It can. Showing a broker you hold far more than the asking price tells them something they can use. How to prove capacity without disclosing the number.

• Proof of funds letter, bank statement, or verification: which to send

  The four ways to prove funds to a business broker, what each one actually demonstrates, how long each takes, and how much of your position each exposes.

• Why is a broker asking for proof of funds before showing me anything?

  Why proof of funds moved earlier in the process, what the broker is protecting, and what it signals about how seriously you are being taken.

• Can I use my 401(k) or IRA as proof of funds to buy a business?

  When retirement money counts towards proof of funds for a business acquisition, when it does not, and the questions a broker will ask about it.