One of the most powerful levers available to business owners who want to maximize their exit value is the strategic use of other people’s money. When used correctly, leverage can accelerate growth, improve profitability, and increase the overall value of your business before you go to market.
However, leverage is a double-edged sword. Used poorly, it can create unsustainable debt loads, damage cash flow, and ultimately reduce the value of your business when it’s time to sell. The difference between smart leverage and destructive leverage often comes down to discipline, timing, and alignment with your long-term exit goals.
In this guide, we explore how business owners can use other people’s money effectively to increase their exit value — and what to avoid along the way.
What Does “Other People’s Money” Actually Mean?
“Other People’s Money” (commonly referred to as OPM) refers to any capital that is not your own equity. This includes bank loans, SBA financing, equipment financing, lines of credit, investor capital, and even certain forms of trade credit or vendor financing.
The core idea is simple: Use someone else’s capital to generate returns that are higher than the cost of that capital. When this works, it creates leverage that can accelerate growth and increase the overall value of your business.
Common forms of OPM used by business owners:
- Term loans and lines of credit for expansion, equipment, or working capital
- SBA loans for acquisitions or long-term growth projects
- Real estate financing to separate and monetize property value
- Investor or partner capital in exchange for equity or profit sharing
How Leverage Can Increase Your Exit Value
When used strategically, borrowed capital can help you grow faster than you could with your own cash alone. This faster growth can lead to higher revenue, better margins, and ultimately a higher valuation when you sell.
Key ways leverage can increase exit value:
- Accelerate growth: Fund expansion, marketing, or new locations without diluting ownership or draining cash reserves
- Improve unit economics: Invest in systems, technology, or real estate that increase margins and scalability
- Build transferable value: Use capital to reduce owner dependency and create more scalable operations
- Separate real estate value: Finance property separately so the business sale doesn’t include real estate (often increasing total proceeds)
Co. Buy Sell Perspective: We’ve seen many business owners significantly increase their exit value by using leverage strategically in the 2–4 years leading up to a sale. The key is using the capital to create lasting improvements in the business, not just to fund short-term spending.
The Risks of Using Leverage Before Selling
While leverage can be powerful, it also carries real risks. Taking on too much debt, or using it for the wrong purposes, can damage cash flow, increase risk, and ultimately hurt your valuation when you go to market.
Common mistakes to avoid:
- Over-leveraging: Taking on more debt than the business can comfortably service, especially if revenue is inconsistent
- Short-term thinking: Using expensive capital (like high-cost MCAs) that creates unsustainable repayment pressure
- Poor timing: Adding significant debt right before going to market, which can raise concerns for buyers
- Lack of clear ROI: Borrowing money without a clear plan for how it will generate returns
Best Practices for Using Leverage Before an Exit
If you’re considering using other people’s money to grow your business before selling, here are some principles that can help you do it effectively:
- Have a clear plan: Know exactly how the capital will be used and what return it is expected to generate
- Focus on long-term value: Prioritize investments that improve transferable value (systems, team, customer diversification, real estate)
- Maintain healthy cash flow: Ensure debt service does not create unnecessary stress on operations
- Time it appropriately: Ideally, use leverage 18–36 months before going to market so results are visible to buyers
- Work with experienced advisors: Get guidance on structure, terms, and how the financing will be viewed by future buyers
The Bottom Line
Using other people’s money can be one of the most effective ways to accelerate growth and increase your eventual exit value — when it’s done with discipline and a clear strategy. The goal is not just to borrow money, but to use it in ways that create lasting, transferable value in your business.
Businesses that grow intelligently with the right mix of equity and leverage often achieve significantly higher exit multiples than those that try to grow only with their own cash or take on poorly structured debt.
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