Restructuring a live deal after diligence found a fake fund
A sponsor's technology fund did not exist and the lender's letter had lapsed, so I restructured the terms and kept the relationship.
A sponsor asked Common Ground to help structure capital for a large land community. The sponsor cited a technology fund said to exist, plus a lender letter of intent that looked current.
I verified the claims before we moved any capital. The technology fund did not exist. The lender's letter of intent had lapsed already, and nothing had been recorded. I did not proceed on the original terms, and I did not simply walk away empty-handed. Instead I countered with a different structure.
A deal resting on claims you cannot verify independently is not worth funding on the sponsor's word, however good the terms look on paper. A problem found in diligence does not have to end the relationship. It can mean rebuilding the deal around the real risk.
My counter was a success fee plus developer units, in place of a straight capital commitment. That limited our exposure and kept the relationship alive, and the deal later went ahead on different, safer terms.
When diligence shows that something a sponsor represented is untrue, the answer is often neither to walk nor to proceed blind. It is to rebuild the terms around the risk you just found. Staying calm and constructive after discovering what could easily have been treated as a betrayal took discipline, and I found it easier to solve the problem than to react to it.
Story details
| Project | Silver Mountain Ranches |
|---|---|
| Type | Wrong about a person |
| Year | 2026 |
| Firm telling | on the Common Ground wiki |