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I have a client that is selling their S Corporation to another company. The S Corporation has outstanding credit card bills from the owner of the company. Are these outstanding debts included in the sale price?
ANSWER
The BIDaWIZ Team's Answer:
Typically when one company purchases another based on its enterprise value the amount paid includes the equity value plus the net debt (debt less cash). As such, we would expect the buyer to pay off the debt. Of course, this can always be negotiated per the term structure.
