Selling a business with debt: is this possible?
Wednesday, September 9, 2026
Selling a business with debt is perfectly possible in many cases. A loan, overdraft debt, or other financing does not necessarily stand in the way of a business sale. However, the financial structure of your company does influence the selling price, buyer interest, and the agreements made during the sales process.
This frequently causes confusion among entrepreneurs. Does the debt transfer to the buyer? Must it be repaid before the transfer? And does having debt automatically mean you will receive less for your company? The answer depends on the type of debt, the transaction structure, and the financial performance of the company. In this blog, we explain what you need to consider when selling a company with debt.
Is it possible to sell a company with debts?
Yes, you can a sell company with debt. For a buyer, it is particularly important whether the company is financially sound and generates sufficient cash flow to bear its obligations.
Many healthy businesses make use of debt financing. Debt is therefore not automatically a problem during a business takeover. However, a buyer looks critically at the size, conditions, and background of the financing. The following factors play a role in this:
Financial capacity
: A buyer assesses whether the company generates sufficient profit and cash flows to pay interest and principal.
Amount of debt
: The total debt burden is set against, among other things, EBITDA, cash flows and the value of the company.
Reason for financing
: A loan for a profitable investment is assessed differently from debt resulting from structural losses or liquidity problems.
Financing conditions
: Maturity, interest rates, repayment obligations, collateral, and covenants can influence the attractiveness of the enterprise.
A company with debt can therefore still be very sellable. It is primarily about whether the financial structure matches the earning capacity of the enterprise.
What happens to the debt if you sell your business?
What happens to the debt during a business sale depends on the transaction structure and the agreements between the buyer, seller, and financiers.
Therefore, in the event of a sale, it is determined in advance which obligations remain within the company and which financing arrangements are repaid or refinanced around the transfer. There are various possibilities:
Share transaction
: At a share transfer The enterprise continues to exist legally. In principle, assets and liabilities remain part of the same company, while the ownership of the shares changes.
Repayment upon sale
: A portion of the existing financing can be repaid from the sales proceeds at the time of transfer.
Refinancing
: A buyer can choose to replace existing loans with a new financing structure that better aligns with the situation after the acquisition.
Asset-liability transaction
: In this type of transaction, specific assets and potentially certain liabilities are transferred. The parties then determine which debts are and are not part of the transaction.
Agreements with financiers
: Banks and other financiers may have included conditions for a change in shareholding. It is therefore important to check these agreements in advance.
The most suitable solution varies from company to company. Therefore, it is wise to map out existing financing early in the sales process.
How does debt affect the selling price of your company?
Debt can reduce the ultimate return for the shareholder, because the enterprise value is not the same as the value you ultimately receive as the seller.
In a business acquisition, the enterprise value is often assessed first. Subsequently, various balance sheet items, among others, are taken into account to arrive at the final share value.
A simple example:
Enterprise value: € 5.000.000,-
Net financial debt: € 1.000.000,-
Indicative share value: € 4.000.000,-
The actual calculation may be more extensive. Various items can influence the final purchase price during negotiations.
Net financial debt
: Financial debts are typically reduced by available liquid assets to determine the net debt position.
Working capital
: Buyer and seller often agree on the normal level of working capital that must be present in the company at the time of transfer.
Lease obligations
: Depending on the transaction structure, certain lease liabilities may be treated as a debt item.
Shareholder loans
: Loans between the company and shareholders must be clearly identified in advance and processed in the transaction.
Other obligations
: Arrears of taxes, special provisions, or other financial obligations may also be subject to negotiation.
It is therefore important to distinguish between the value of your company and the amount you ultimately receive as a shareholder.
Is high debt always detrimental during a business acquisition?
No, high debt is not automatically detrimental. The most important question is whether the company can responsibly bear the debt and whether the financing has contributed to value creation.
Buyers therefore look beyond just the amount on the balance sheet.
Earning capacity
: A company with strong and predictable cash flows can generally carry more financing than a company with highly fluctuating results.
Purpose of the loan
: Debt used for investments in machinery, acquisitions, or growth may be acceptable when these investments yield a structural return.
Repayment capacity
: A buyer assesses how much room remains to pay off debts after interest, taxes, and investments.
Future investments
: When major investments are necessary shortly after the acquisition, an existing debt burden can limit the available financial headroom.
Financial flexibility
: A company with sufficient financing capacity can respond more easily to setbacks or new growth opportunities.
A company with relatively high debt can therefore still be attractive, as long as the financing structure aligns with the results and future expectations.
How do you prepare a debt-ridden company for sale?
Preparing a debt-ridden company for sale begins with transparency and a full understanding of the enterprise's financial position.
The sooner it is clear what financing is in place and what impact it has on the transaction, the better you can prepare for discussions with potential buyers.
Inventorying financing
: Fully map out bank loans, current account facilities, leases, shareholder loans, and other financial obligations.
Check conditions
: Analyze interest rates, maturities, repayment schedules, collateral, and any provisions that become relevant upon a sale.
Determine business value
: A valuation provides insight into the enterprise value and helps determine what value may remain for the shareholder.
Calculate scenarios
: Investigate in advance what the effect is of repayment, continuation or refinancing of existing debts.
Preparing administration
: Ensure you have up-to-date figures, financing agreements, and clear supporting documentation. This prevents delays during the due diligence investigation.
Determine sales strategy
: The debt position can influence the suitable buyer, transaction structure, and the way the company is positioned on the market.
Good preparation prevents surprises during negotiations and ensures that you can better assess what an offer actually means for you.
What role does an advisor play in selling a company with debt?
An independent advisor helps to clarify the impact of the debt on the value, transaction structure, and final sales proceeds.
For a company with various financing arrangements, it is important not to compare bids solely on the stated selling price.
Valuation
: An advisor maps out the enterprise value and relevant adjustments, so that it becomes clear what return may remain for the shareholder.
Transaction structure
: It is being examined how existing financing can best be handled within the sale.
Evaluation of bids
: It is not just the price that counts. Agreements regarding debt, working capital, payment, and financing security also determine the attractiveness of an offer.
Negotiation strategy
: An advisor helps to identify financial points of contention in advance and carefully incorporate them into the negotiations.
Process guidance
: By centrally coordinating valuation, buyer selection, due diligence, and negotiations, you, as an entrepreneur, maintain an overview throughout the process.
As a result, you know not only what your company is worth, but also what you can actually expect after the transaction.
Why choose Match Plan?
Selling a debt-ridden company requires careful preparation. Not only is the enterprise value important, but also the debt position, the transaction structure, and the amount you ultimately receive as a shareholder.
Match Plan guides entrepreneurs from initial orientation to the final transfer. As independent advisors, we ensure a structured process that prioritizes your interests. What we do for you:
- We guide the sales process from initial strategic exploration and valuation to negotiations, due diligence, and formal transfer.
- With over 30 years of experience, we combine in-depth knowledge of business transfers, valuations, and financing with a personal approach tailored to your situation.
- Our advisors help consider the best way to incorporate existing debts, financing, and any refinancing into the transaction.
- We work independently and transparently, always prioritizing your personal and business objectives.
- We coordinate the entire process and monitor the key financial and commercial agreements, so that you maintain an overview and can continue to focus on your business.
Would you like to know what your debt position means for the saleability and potential proceeds of your business? Feel free to contact us for a no-obligation consultation. We are happy to think things through with you.
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