BizSugar.com › Finance › What Happens to Debt When Selling a Business?

Entrepreneurs may often be under the wrong impression that their business debt will disappear when the business is sold. In some cases, the debt is absorbed or is assumed by the buyer. But usually this is not the case. Knowing what happens to business debt when selling a business is a critical part of the exit planning process and in determining which buyer is making the best offer. Furthermore, understanding how the debt on the company’s books ultimately affects the purchase price paid by a buyer or investors is important. And regardless of how the business is transferred, it’s important to understand how debt on the company’s books influences the price paid by the buyer or group of investors.