Raising capital should be a milestone moment for a growing business, not a minefield. Yet time and again, strong companies with good finance functions find themselves stumbling or failing in a process they should have been well prepared for. The reason is rarely the business model or financial performance, the root cause is in preparation and the finance function setup – not because it is weak, but because it is built for business-as-usual, not transaction mode.

BAU v Transaction Finance: A Different Game

A solid BAU finance team focuses on monthly reporting, payroll, cash management and compliance – keeping the corporate machine running. A fundraising or debt process, however, demands something else entirely: cross-document integrity, defensible assumptions, cohesive information flow, and real-time responsiveness. It is, effectively, a completely different game.

Information Integrity

Business funders expect a clean, traceable line from the accounting systems to statutory and management accounts and to the 3-statement integrated forecast model. But in many transactions, this integrity breaks down:

• Management accounts don’t match the model.

• Cash movements cannot be reconciled cleanly.

• Models are focused on P&L projections and lack coherent view of working capital, capex and ultimately balance sheet and cashflow.

• The accounting system outputs don’t tie back to the numbers in the investor deck.

These issues don’t just raise questions, they raise doubts that slow deals, erode confidence, and invite far deeper diligence than anticipated.

Models That Don’t Survive First Contact With Reality

Many companies enter a fundraising process with models that have been lovingly built but become instantly inadequate when actual funder requirements materialise in questions and challenges. Some of the key issues include:

• Hidden and unsubstantiated assumptions.

• Uncosted operational improvements.

• Margins that are not benchmarked.

• Commercial claims that lack evidence.

These all suggest the business lacks grip, making funders dig even deeper or walk away completely. Whilst this typically happens subtly without explicitly raising alarm bells, the increased pressure and scrutiny often necessitates backfilling evidence and validation work. This causes stress and frustration and can snowball into underperformance as management focus on running the business is diluted.

‘Bank Case’ Issues

A bank case is the conservative, sensitised scenario that shows lenders how the business performs under more modest or flatlined conditions. This avoids debt covenants being set to breach, even if the business is not doing badly in the future.

When a bank case is not proactively provided, lenders will take the initiative to construct their own, which is rarely best for the business. Equally, the finance team can be too defensive in setting the bank case in an effort to showcase the business in the best light, while actually reducing covenant headroom with unnecessarily optimistic projections.

The Role of a Good Adviser

None of this happens because businesses are weak or finance teams are incompetent. They simply aren’t set up for transaction-level connectivity, pressure, knowing potential pitfalls or speaking ‘debt’ language. BAU doesn’t require detailed model traceability, assumption audit trails, covenant testing or investor-grade commentary. Unfortunately, a fundraising process does.

The difference between a smooth and a painful process often comes down to preparedness and this is exactly where experienced advisers pay for themselves. They upgrade BAU finance into transaction mode: aligning data, validating assumptions, building bank cases, tightening models and ensuring every number in the data room stands up to funder scrutiny.

Further value is then added by turning incoming funding offers into negotiated covenant packages that actually support vs restricting business growth. But that’s a whole other topic we covered here

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Alexei Garan is a Partner - Business Funding at Shaw & Co.

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