Glossary · Reading the business
Liabilities
In short
These are the financial obligations or debts a business owes to others, like accounts payable or existing loans. Buyers must identify and understand all liabilities to assess the true financial health of the business.
What it means in a deal
During due diligence, you'll scrutinize the business's balance sheet for all existing liabilities. In an asset purchase, you typically assume only specific, agreed-upon liabilities, while in a stock purchase, you assume all of them. Hidden liabilities are a major risk, so your due diligence and legal review are critical to protect you.
Related terms
Common questions about Liabilities
- What happens if the business being acquired has significant outstanding tax liabilities at closing?
- What if the business I want to acquire has undisclosed liabilities discovered during due diligence?
- Does finding significant undisclosed liabilities during due diligence kill an SBA 7(a) acquisition loan?
- If multiple owners each guarantee the loan, are their liabilities typically joint and several or individual?
- Can unreported tax liabilities discovered during due diligence from the seller's business kill my acquisition loan?
- Can I purchase a business with an SBA 7(a) loan if it has significant environmental liabilities?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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