Asset v. Stock Sale to Leave Behind Seller Debt?

searcher profile

September 27, 2020

by a searcher from Massachusetts Institute of Technology - MIT Sloan School of Management in Florida, USA

I'm looking at a company with low FCF and heavy debt so not particularly attractive however their technology is interesting. What are the group's thoughts on structuring the deal as asset sale to leave behind the seller liabilities? Has it been done before?

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commentor profile
Reply by an intermediary
from The University of Chicago in Chicago, IL, USA
Most likely the lender (or debt provider) has hooks on the assets of the company, including its technology. If it is institutional debt, it most likely has change of control clause. You need to get a release of any hooks and address the change of control. Asset or Stock does not make any difference.
commentor profile
Reply by a searcher
from University of California, Santa Barbara in Los Angeles, CA, USA
These are very tricky situations and involve really understanding the debt and it’s guarantees. If you want to chat on it, you can reach me at dan (at) resurgentcp (dot) com

ive been through a few of these
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