selling a startup: What about the debt ?
I have a very practical question for the community relate to the selling of my starting, and what happen to the debt.
I have a start-up about to be acquired. My company has some debt, and i was wondering what actually happen in this case.
Debt is a mix of unpaid salaries, contractors ...
The acquirer will purchase 100% of the shares at a given price and the acquirer agreed to inject enough money post-acquisition to sustain and develop the business.
To deal with the debt, In my opinion, there are 2 options:
1- pay the debt off the money received from the acquisition: problem is that this money belongs to share holder, so unless there is a 100% consent from a shareholder meeting, we cannot use their money.
2- the acquirer "buys" the debt as a package with the company, and settles it post-acquisition.
Could someone help me figure out what would be my decision in such case ?
Are there options I did not think of (most probably) ?
Thank you all so much for any time spent reading and replying.