Pre-Lending Reviews

Pre-lending reviews are generally carried out at the request of a financier, with the aim of assessing the risks associated with providing or refinancing debt to a client. Its main purpose is to demonstrate to the financier that potential risks have been identified, addressed and monitored.

There are also good reasons for companies to undertake such reviews of their own accord. The review can act as a “health check” for the company, highlighting areas of concern or caution. This is often particularly useful when a company is perhaps considering whether to source additional funds, but doesn’t know whether they would be able to do so.

A pre-lending review can help determine whether additional funding would be likely, or even appropriate. If the review reports on areas of concern (eg internal systems and procedures), then management has the opportunity to correct or address those areas before they approach the financier.

Our commitment to you

dVT Consulting’s approach to any assignment, whether it be a small family business or a well-established national company, is to tailor a program that specifically addresses the concerns and risks of that business, providing a more cost effective outcome for the client.

Whether the client is the financier or the borrower, we provide the financial nous, the business understanding and the pragmatic approach to get the job done. We also maintain an impartial approach towards evaluating the business and undertake strict levels of confidentiality.

Examples of services we provide:

It can be a fairly straightforward review of debtor and sales procedures to a comprehensive health check incorporating a security assessment and evaluation of internal controls and management systems.

Each assignment is scoped to the individual client, ensuring that the information provided is therefore relevant and timely. Our reviews can include a number of areas, including:

• Analysis of past trading performance
• Review of trading budgets and cash flow projections
• Review of internal controls and management systems
• Review of reporting systems and management information systems

Types of assignments undertaken:

• When asked to review outstanding liabilities and tax issues, we discovered trading was dependent on profitability of its current and future projects. No consistent systems were in place to ensure contracts were properly costed and this resulted in claim disputes. Recommendations were made on the systems required.

• Pre-lending review focussed on growth issues and development of strong internal controls and management systems. Strategic advice was given on an ongoing basis via our presence on the advisory board.

• Pre-lending review for a national manufacturer of water tanks carried out on behalf of the proposed financier. Turnover was in excess of $30 million and the review identified a number of anomalies which were addressed prior to financing being approved.

• Debt Financing – our client is a mid-size firm in the debt capital market specialising in private and unlisted asset markets, as well as some public companies, and as part of their own requirements engaged us to provide an independent report on the recoverability of their debt portfolio. The total value of the portfolio reviewed was in excess of $16 million. The engagement involved analysis of actual and forecast trading results and the net financial position of the various debtor companies.

References are available on request.