Key Takeaways
- Define the asset, objective, scope, and decision timeline before outreach.
- Keep data, documentation, ownership, servicing, and material exceptions connected.
- Compare complete economics and execution terms rather than a headline number alone.
- Document responsibilities, transfer controls, and the next review step.
Establish the nature of the position
An agreement described as a purchase of future receivables can raise issues different from an ordinary business loan. Characterization depends on the terms, facts, and applicable law. Avoid assuming that every MCA is a loan or that every receivables-purchase label controls the outcome.
Review reconciliation rights, repayment contingencies, guaranties, default provisions, amendments, authorizations, and prior enforcement. Counsel should assess the proposed rights and remedies before they are represented to a buyer.
Create a defensible balance and evidence file
| Evidence | Purpose |
|---|---|
| Agreement and amendments | Identify the purchased rights and contractual obligations |
| Funding and receipts | Reconcile actual disbursements, collections, credits, and claimed balance |
| Merchant and payment records | Support relevant performance and interruption history |
| Liens and other financing | Evaluate priority, competing claims, and the proposed recovery path |
| Disputes and enforcement | Identify litigation, defenses, settlements, stays, or prohibited claims |
| Assignment and ownership | Establish authority and any consent or transfer limitations |
Scroll horizontally to read the full table.
Check for claim-specific restrictions
Enforcement actions and settlements can invalidate, cancel, or restrict specific obligations. For example, the New York Attorney General’s Yellowstone settlement resources explain relief affecting covered agreements and claims. Review applicability; do not generalize one settlement to every MCA or market a canceled claim as collectible.
Compare the available strategies
Evaluate a lawful workout, continued recovery, or sale using supported net cash scenarios and transaction-specific advice. A buyer will assess expected recoveries, timing, costs, evidence, and defenses. There is no universal recovery percentage based solely on a merchant’s number of financing positions.
Define exclusions, diligence, representations, recourse, and closing obligations. An assignment does not erase prior conduct or every remaining contractual responsibility.
Sources and Further Reading
This page provides general information for institutional and commercial readers. It is not legal, tax, accounting, investment, or transaction-specific advice. Requirements and outcomes depend on the assets, parties, jurisdictions, and agreements. Obtain appropriate professional advice for a proposed transaction.