Business Brokers, There Is A Better Way To Sell A Business

The recession is taking a serious toll on small business owners. Universally, revenues are down and this, of course, devalues a business. However, the debt remains the same and the business owners are gagging on it. One response is to sell and try and get enough to cover the note. This is an act of futility as the business is no longer worth what it once was when revenues were higher. When the debt remains the same it becomes a huge barrier to an effective sale as the value of the business is no longer worth the debt, making the sale price too high. The business cannot be sold.

Simply stated, many small business owners are in default or simply choking on their debt service and want to sell their business to end this problem debt because soon they will be foreclosed on. Or, in a better situation, they are current on their debt but stressed with no cash available, so they want to sell the business to remove the debt and free themselves to move on. It’s an impossibility; the business is simply not worth the asking price meant to cover the debt.

It’s simple math, the business is no longer worth what it once was, thus a sale to cover the debt is impossible. Thus, there will be no sale and that does no one any good. The answer? DEBT WORKOUT!

If the small business owner works out his debt PRIOR to the sale, the sale can occur debt free! Thus, any reasonable offer will work. This can be implemented in many ways but the simple solution to a seemingly impenetrable barrier–too much debt–is a debt workout that forgives debt and frees the assets to be sold. This works. This is the way. If the core business is viable, but too top-heavy with debt, lose the debt then sell the business.

Call us. We can help implement such a strategy.