Selling Your Business? Be The Bank!! But First, Do Your Workout. It May Be The Only Way To Sell Your Business.

Banks are not lending and your business is no longer worth the amount of the debt thus if you try and sell the business for more than it’s worth to pay off the debt, no one will buy. Unfortunately, you had hoped and planned that the sale of your business would fund your retirement but instead you are preparing to lose it all and be forced to file a personal bankruptcy to resolve the remaining personal guaranties. What a mess. You ask yourself, “Now what?”

Banks not lending, debt too high to sell… it is the perfect storm. We suggest two strategies, solving two very different problems that are forcing you into foreclosure, liquidation and eventually, bankruptcy. First, work out the debt, and then second, sell the business for what it is worth, not for what the debt may have been. Once the debt is worked out, the business can be sold for whatever the market will pay.

Once the business is ready to sell—after you do the workouts—the banks will still not be lending so you need to be the bank. What choice do you have? Make the business easy to buy and earn interest as well. Balloon it in five years and have consequences if the buyer cannot close, such as a loss of sale option, eviction and return of the business to the selling owner, etc. Maybe even require a small down payment to purchase the option.

The point is, if selling your business is your goal, these two barriers are impenetrable if not handled effectively. The combination of doing your workouts to clean off the debt and then being the bank is a powerful combination of strategies which will support your goals and objectives.