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  • #999944
    Andrew1960
    Member
    • Total posts: 22

    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

    #1221958
    bb1
    Participant
    • Total posts: 4,485
    Andrew1960, post: 268126, member: 102355 wrote:
    Does this model work from a banks perspective?

    Thanks
    Just wondering, and it’s a crazy thought on my part, but it is late on a Saturday night so sometimes that is when I have crazy thoughts. Wouldn’t it be best to ask the bank, yeah I know what a ridiculous thought.

    #1221959
    Jason Ramage
    Participant
    • Total posts: 3,161
    Andrew1960, post: 268126, member: 102355 wrote:
    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?

    Jason Ramage | Lucas Arthur Pty Ltd | E: hello@lucasarthur.net.au   P: 61 3 8324 0344    M: 61 412 244 888
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