An acquisition financing decision should account for the obligations the buyer will carry after ownership changes. Don McClain, Founder of Medro Advisors, explores the repayment questions behind that decision in his October 8 article. The discussion encourages buyers to identify payment terms, principal reduction, the final balance and the business activity expected to support the obligation. For an acquisition team, the next step is to reconcile those answers with the proposed financing documents and transaction assumptions. Where repayment depends on future operating improvements, the underlying conditions should be stated clearly and reviewed before the buyer commits. Related reading: the forthcoming book FUNDED.
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