Are you thinking about buying that company that you love?
You have already decided and you have succeeded in advancing a few steps in the buying/selling process with the owner of the company. However, you are confronted with one of the most complicated problems of the operation: the seller’s understanding of the inequality that exists between the value of the shares and the debt accumulated.
The most efficient method, as a buyer, to cross this obstacle and achieve your objective is to present the business to the buyer, rather than the company. This represents for you the most advantageous alternative, because with an acquisition you avoid the debt that the company has with the banks and the responsibilities from past events. These would remain with the company and in the hands of the seller while you, as the buyer, avoid the risks.
You may arrive faced with a company with a lot of debt, but if you put a price only on the business, the seller will understand better that you are implying that his shares are not worth anything. Since you are buying the business free of debt, you, as a buyer, also have the option of requesting a bank loan to complete the purchase and pay the seller. The reasoning of the banker will be due to the fact that the business has no debt, you will be able to repay the financing with the funds generated by the same business.
As you can see, it is more convenient to buy the business rather than the company because you avoid many risks that could harm you later down the line. The question now is: will it also be the most convenient option for the seller? In reality, the seller is left with the debt and will have to pay more taxes. However, it is an option to be evaluated and one which ought to be explored at the time of purchase.