Reuben Daniels is the Founder and Managing Partner of EA Markets LLC, an independent capital markets investment bank with expertise in corporate finance. With more than 20 years of experience providing strategic financial advisory services to leading public companies and their boards, he’s the go-to guy for your questions about borrowing.

Below is a cheat sheet from Daniels’ recent talk at a YPO Mergers, Acquisitions and Strategic Transactions (“MAST”) event in New York, New York, USA — a presentation that used “The Wizard of Oz” as an analogy for pulling back the proverbial curtain on a frightening, all-powerful lender to reveal the simple truth — that borrowing isn’t scary when you have the facts.

“A successful process for borrowing money is nearly identical to the M&A process,” says Daniels, a YPO member since 2014. “There are thousands of lenders — from small direct lenders to major universal banks — and each has their own specific investment mandate. The good news is that the decision to lend money is fundamentally the same for all of them.” Following are Daniels’ four key concepts that every borrower should know before approaching lenders:

Lenders are not all the same

Dynamics in the capital markets have led to a proliferation of debt capital sources with each focused on different segments of the market. Borrowers can target cash flow lenders, asset based lenders, insurance company lenders, financial risk-return lenders, business development companies and many types of specialty lenders. Targeting the appropriate type of lender is critical to a successful financing.

Each lender has a unique mandate

Every lender has a specific set of characteristics they are looking for in a borrower. Lenders can focus on an industry sector, financing size, credit attributes, use of proceeds, form of borrowing and return profile. When a borrower meets a prospective lender out in the wild, learn about their objectives by asking, “What is your investment mandate?”

Lender’s capital commitment frameworks are fundamentally the same

Most borrowers incorrectly assume their company’s credit profile is the most important factor in raising debt capital. While credit quality must be sufficient, a significant portion of the lender’s decision process can depend on the amount of work required to close a transaction, the lender’s perception of the competitive dynamics on the deal and a transaction’s contribution to the lender’s franchise overall. Understanding the lender’s motivations beyond credit-worthiness is essential to a successful transaction.

The debt financing process is very similar to the M&A process

A successful M&A process depends on high quality preparation, deal team, materials, negotiation and execution. Similar to raising debt capital, the borrower must accurately assess their debt financing attributes as well as the investment mandates of potential lenders. The critical first step in any debt financing process is to align the borrower’s goals with the lender objectives in order to raise the most attractive capital efficiently.