E30 Debt’s Impact on the Selling Process with the Advisory Team

EA030 – Debt’s Impact on the Selling Process with the Advisory Team

 

When a company needs to scale, it will almost always incur debt. This adds a layer of risk when purchasing a company, as you also have to consider inheriting that debt. While debt itself won’t make the transaction volatile, owners and advisors should assess whether it would be to their advantage to proceed. What are the questions you have to ask about debt? Can you decide to pass on debt?

 

Today, we describe our thoughts on buying companies in debt and the factors owners and their advisory teams need to consider before proceeding with the transaction. We explain why being in debt isn’t necessarily a problem. We share some ways to mitigate the risks associated with buying a business in debt. We also discuss commonly overlooked details in business valuations and why advisors can’t just make assumptions.

 

“Debt isn’t always a bad thing, so don’t be scared of it. Just know how to deal with it.” – Jean-Luc Johnstone

 

This week on the Expensive Advice Podcast:

 

Debt and the factors to pay attention to during a business sale

Questions you must ask when dealing with company debt

Factoring the value of the debt into the final purchase price

What people overlook in determining the value of a business

What buyers can do if they don’t want to inherit existing debt

Why it’s challenging to make assumptions as advisors

 

Resources Mentioned:

 

Stock Sale vs Asset Sale with the Advisory Team

 

Connect with Matt Smith and Jean-Luc Johnstone:

 

Matt Smith on LinkedIn

Jean-Luc Johnstone on LinkedIn

 

Turning Boring Money into FUN Money

 

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