Ask the Advisor – Q: What does it mean to “buy a balance sheet”?

Description

Abstract: In an uncertain economic climate, bank financing for strategic growth initiatives can be hard to find — even for financially healthy companies. Buyers having trouble attracting lenders could consider “buying a balance sheet,” or acquiring a cash- or asset-rich company it has little strategic use for to use as loan collateral. This strategy can not only benefit buyers, but also sellers with a decent cash reserve or significant liquid assets, who can then negotiate for a higher-than-market price and favorable deal terms.