Another major hurdle in selling your business is managing your long-term debt. Many sellers assume the debt in question will be bought with the company and paid off by the buyer. However, managing the debt before the sale of a company is the seller’s obligation.
Managing Long-Term Debt
Having long-term debt does not mean that your business is completely unsellable, and there are options to alleviate that debt. One option is to relinquish that debt as soon as possible. Have the debt retired before closing, or make sure to retire the debt at closing. Although the buyer can assume the debt of the acquired business, he or she will probably deduct the amount of debt from the proceeds of the sale.
If you are worried that your company’s long-term debt may block a potential sale, call your lender and explain your situation. From there, you can negotiate with the lender if he is willing to accept a percentage of the amount owned within a certain time period. If you fail to meet the terms of the agreement, then the original deal reverts to paying off 100 percent.
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