If You Want To Buy Or Sell A Business, Remove The Debt First
There are many businesses for sale today and many potential buyers interested in buying. One huge obstacle is the debt the for-sale business is carrying which forces the purchase price higher than what you want to pay and higher than what it may be worth. This is a very common situation. Many sellers try to load their selling price with the full debt load, as they believe this is what they must do, thus, no sale will occur.
Sometimes the business is facing foreclosure and the bank is forcing the business owner to sell or face foreclosure liquidation. Once again the business owner adds the debt to the selling price.
Many owners understand the notion of a short sale but they still start with the debt and then look for as much as possible even if it is less than a full payoff, understanding the bank will accept less. Even a short sale strategy, while better, is not always good enough because it still presumes a significant debt paydown.
There is a better strategy – either the buyer or the seller can initiate this workout procedure as it is the same strategy, it is really just a matter of who understands it and utilizes it to their advantage. The buyer can offer the seller to provide our services to rid the selling business owner of the debt thereby enticing him to sell the assets to you for liquidation value and enjoy the benefits of debt relief. This resolves the seller’s major issue and allows the buyer to purchase at rock bottom prices while satisfying the bank’s liquidation requirements but not the debt, so they release the assets with a minimal payoff.
Wow, that’s a powerful strategy with a terrific result!
Alternatively, the selling business owner can initiate our debt stripping workout mechanisms and other strategies we provide then market the business without the debt, selling the business assets at whatever fair price he can get.
Debt is the killer of deals that could be made. Deal with it and win, whether you are the seller or the buyer, it works just as well. Strip the debt off the assets and deals can be made. Debt kills the deal.
