The story below, from Josh Greenbaum, nails it: a debt is an obligation, and a financial debt represents an obligation on your balance sheet – or as Josh puts it, a skeleton hiding in your business.

Businesses face other kinds of debt, too. Software shops often speak of "technical debt," those less-than-ideal tech moves that help meet a product deadline.

And then there's AI debt. There's a lot of this going around -- either companies diving into AI without a plan, or vendors selling products that don't quite work as expected.

(As someone who performs assessments and due diligence around AI, I can assure you: AI debt is very real. And plentiful.)

The common thread is that unpaid debts eventually come due. They can impact your valuation, or share price, or even an acquisition.

I encourage you to check out Josh Greenbaum's post, below:

(For more on AI-related debt, you can review this piece I wrote this piece last year.)

M&A on the cheap almost never ends well.

Here's a story for you...

Listen, I know professionals aren't cheap because I'm one of them. A client decided to approach the sale of his company without engaging me (it was out of scope work) nor engaging a lawyer (though I highly advised that). All was going well as the potential buyer was a friend and there were synergies.

Synergies - buzzy business words make me laugh.

In any case, negotiations were going well and a final number was agreed on. Now due diligence, which is the period in which the buyer will deep dive into the nitty gritty to ensure there are no skeletons hiding.

Debt was never going to be part of the transaction. Debt would stay with the seller and that aspect of the business was generally overlooked...until the buyer's lawyer started to ask questions.

It turned out those loans were tied to inventory and ultimately killed the deal because the buyer didn't want to assume the loans - too much risk.

Moments like these are heartbreaking and also great lessons. It's so so so important to know the details and ramifications of things like debt. And for those of you in the fundraising phase, consider convertible debt as well.

Where might you have skeletons hiding in your business?