Pay off debts when getting ready to sell your small business?? How to Sell a Business

A debt-free business is easier to sell; Right?

I had an online exchange the other day with a guy on the west coast who believed that paying off his business debt was a key ingredient in preparing it for sale.

WRONG.

There are all kinds of problems with this thinking but this week I simply want to discuss it from the buyer’s point of view.

(There will be another video in two weeks about how this thinking affects the seller’s wealth.)

Does small business debt have an impact on the value of the company?

Nope, just like your mortgage doesn’t have an impact on the value of your house. The value of a business is derived from its cash flow.

Do you think they care if your business owes money? 

Well, this is a little more complicated.   A buyer may actually care quite a lot and it may not be for the reasons that a seller thinks.  I made this video to explain why some kinds of debt within a business may be very interesting for a potential buyer.  Watch it here: https://youtu.be/pOJ3B1_K9L8

This business owner would certainly benefit from working with me to get his business ready for sale.  I’ve got another mastermind group starting up for 2017.  E-mail me if you’re interested in learning more.  It’s for those who plan to buy, sell, or improve their business in 2017; dbarnett@alpatlantic.com

Learn how I help people sell their business at www.HowtoSellMyOwnBusiness.com

Learn how to buy a business. Visit www.BusinessBuyerAdvantage.com

HALIFAX, NS: I’m coming on November 30, 2016.  Find out more and register at https://ceed.ca/calendar/

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Thanks and I’ll see you next time.