Selling a business

[pontifex]

Say you personally owned a small-medium sized business and then sold it for $20 million. The people who bought it are going to continue running it.

Do you get to keep all $20 million or do you have to pay off any debts your business had with that money? In very simple terms, how does this all work?

 

[tw1164]

Keep all (less taxes)

 

[tfinch2]

That would depend on the details of the sale.

EDIT: Read this:

http://books.google.com/books?...6f7xBj9FBN0MSPeYtg_n_c

 

[JS80]

depends on the terms of the deal.

 

[KarmaPolice]

Like others have said it depends on the terms...you could make sure there is a statement that says that they are taking everything including the debts.

I would think that if it wasn't mentioned in the contract (I can't image one without that being metnionted) they would take the debt with the company leaving you with all 20million...that is as long as your company is a corporation or something and not tied back to you in anyway(which a 20million dollar company really couldn't)

 

[IceBergSLiM]

However it is written in the contract.

 

[Dacalo]

Usually price of the company already has debt and liabilities factored in, since the buyer will want to inspect cash flow, financial statements, GL etc. In most cases, the buyer assumes any debt and liabilities outstanding.

 

[pontifex]

This is just a general question. It's actually brought about because the company I work for was bought for almost $30 million. I don't know any of the details. I was just kind of wondering if the owner of the company just got a major influx of money or if eh had to use some if it to pay off debts. I should have figured that anything to do with finances wouldn't have a simple answer.

Would be nice if I had a business to sell worth $20 million though.

 

[JS80]

Originally posted by: pontifex
This is just a general question. It's actually brought about because the company I work for was bought for almost $30 million. I don't know any of the details. I was just kind of wondering if the owner of the company just got a major influx of money or if eh had to use some if it to pay off debts. I should have figured that anything to do with finances wouldn't have a simple answer.

Would be nice if I had a business to sell worth $20 million though.

Depends - if he sold the company as an entity then the price will reflect Net of cash balances and debt (also known as enterprise value).

I think in most small business sales the owner keeps the entity and just sells the assets (Accounts Receivable, Property plant equipment, the business, etc) and he is left with a shell company with cash and debt (if applicable).