Has your bank asked for an IBR?

Independent Business Reviews (“IBR’s”) are generally requested by banks to provide assurance before taking a decision to continue to lend or not to lend to a business. The IBR will typically be carried out by a “panel” of investigating accountants chosen by the bank to establish the viability of the business and will be used to help justify the bank’s decisions. It may also assist your decision making but usually only tells you what you already know.

Whilst the people selected to do the work are chosen by the bank you have to pay for it. You will have little say as to who carries out the work but you do have the ability to review the terms of engagement and may be able to negotiate the scope and cost particularly if the quality of information you provide to the review team is high, which also reflects well on your management team’s ability. Areas investigated will usually include:

  • Recent trading and financial position
  • Current forecasts
  • Management strengths and weaknesses and business systems
  • Sector/competition strengths, weaknesses and your standing therein
  • Sensitivity analysis driven by findings above
  • Bank security cover
  • Reviewer recommendation(s)

Most likely you will be provided with a draft of the IBR, but not necessarily sight of the bank security cover section or the recommendations made by the review team, to confirm the information is factually accurate.

What should you do if your bank asks for an IBR?

Don’t panic. Consider resisting it if you can. Take your own independent advice. Make no mistake the bank’s investigating accountants are on the bank’s side – not necessarily yours. They get their work from the bank and their primary role will be to serve the bank’s interest. If that matches your interest – great – but more likely than not the bank is nervous about its position and may be poised to make a decision that you do not want to hear.

If you would like to discuss this issue further then do contact us. We are happy to have an initial confidential and charge free meeting either face to face, on or off your premises or over the telephone. For further information telephone 0800 331 7417.

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