Small Business Investing

Investing in a Small Business

Why do investors like to acquire a company’s debt?

Investors like to acquire a company’s debt for many reasons, including the fact that the debt of a company is first in line to be repaid—in front of all equity shareholders—if the company becomes insolvent. If the investor also is given a lien on real property or assets of the company, and the company becomes insolvent, then the debt owner may force the sale of these assets in order to be repaid. So there is more security associated with investments in debt. However, the returns that may be realized could be far less than if the investor acquired equity in the company.


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