Using debt strategically can be helpful for sellers and buyers alike. Let's explore how businesses can be sold using creative debt setups:

Understanding Debt Dynamics in Business Sales

When considering selling your business, you might wonder what happens to existing debts or if you can use debt in the sale. One common question is whether you can sell while letting the buyer take on debt, shaping the deal with loan support.

Structured Transactions: A Win-Win Proposition

Structured deals offer a practical choice for buyers looking to use debt, partly financed by the seller, to buy the business. As the seller, you may act as a lender, providing financial support to buyers as they purchase your business.

These setups typically include cash payments when the deal closes, holding onto some ownership, and potential future payments based on performance. You, the seller, may loan back some of your money to the buyers, reinvesting in the business. To make it more enticing, you might get a higher interest rate than usual and be among the first to be repaid, ahead of other owners.

Internal Sales and Employee Buyouts: Harnessing Debt for Succession

When opting for an internal sale to your employees, using debt can be key, even more so if finding outside buyers isn't feasible or if it's your preferred route. By using debt in the sale, you can smoothly move ownership to your employees. This entails structuring the deal with larger payouts or a fixed interest rate linked to business revenues.

This method helps you, as the founder, smoothly hand over control to your employees. By loaning money to the business, you stay invested in its success while transferring ownership gradually.

Embracing Novel Strategies for Business Transactions

Using debt in business sales isn't just standard; it works for both inside and outside deals, especially with financial buyers. Whether you're financing the sale yourself or selling to your employees, using debt is a smart way to handle business deals.

Exploring Further Insights and Assistance

For those looking for helpful advice on selling, Candor Advisors has resources to guide you. With informative videos like the one above and personalized support through our "Talk to Kirk" feature, business owners can navigate the sales process effectively.

Using debt smartly can make business sales smoother, whether it's through structured deals or internal changes. With expert advice, we help sellers level the playing field between themselves and buyers to meet their WHY and obtain a favorable outcome.