Timing of a deal is a balancing act. You can’t wait until you have completed all of your due diligence before you engage your securities attorney — or you won’t have enough time to raise the money.
Once you engage us, we will schedule a deal-structuring conference with you and your management team. After we complete your initial deal-structuring questionnaire during this call, preparation of syndication legal docs takes about a week before you get your first draft.
Next, you have to read the documents and will inevitably require changes to meet your particular deal requirements. It’s typical to go through two rounds of revision before your final documents can be issued.
The whole process can take two to four weeks; three to four weeks is typical for first-time clients who are unfamiliar with securities offering documents.
You need a 90-day escrow period to syndicate a property unless you only have three or four investors who have already committed to your deal. The first 30-45 days is due diligence and drafting syndication docs; the next 30-60 days is raising the money and processing the acquisition loan. In our experience, commercial lenders don’t start processing your loan until three weeks or so before closing. Ideally, you should complete your due diligence at the same time your syndication documents are finalized. If the seller won’t allow a 90-day escrow, then ask your real estate attorney to draft your purchase agreement for a 60-day escrow with one or two 30-day “financing contingency” extensions. The financing contingency should be worded broadly enough that it allows you more time to raise the money and the bank more time to process your loan, if needed. If you try to negotiate extensions prior to closing, it will cost you a lot more in hard money than if you negotiate them during the purchase agreement.