Hi Guys,
When selling a business that a buyer can’t raise the money for. Is it possible to
-raise debt level in business
-take leveraged cash out of business as purchase price
-transfer the business over to buyer
-new owner then pays off the debt
Does this model work from a banks perspective?
Thanks
Interesting question, although IMO this sounds rather unethical – and being todays times, maybe a bank may not see this as a favourable proposition to increase debt so a potential purchaser can buy the business with the banks money – albeit they couldnt do this on their own merit.
Furthermore, raising the businesses debt would potentially require asses as well.. Who’s assets will be used..
However, taking this to a more fundamental basis with a question not asked and one that should, is that why cant the potential buyer raise the funds? and if they cant, is it a sale one would want to pursue?
Or is this all hypothetical?