Lenders are going to require all debt to be repaid at closing, so you should be getting the assets debt free. However, the cash flow you are using to determine price should be adjusted based on anticipated on-going CAPEX needs for the business on an annual basis. So you should have room in the cash flow on a go forward basis to update and replace equipment as needed. If you have additional questions on this topic, I would be happy to discuss. You can reach me here or directly at redacted

Whether the business is CapX intensive or not, MVIC/EV assumes that Seller is responsible for debt and debt-like liabilities. Debt is almost always paid off at Closing. Debt-like liabilities are either paid off at Closing or buyer assumes them and reduces cash paid to Seller. Seller is not paid net of debt EVEN in a stock purchase. In small deals, existing debt from bank X is paid off by the buyer's bank Y at closing, X releases lien on assets and removed seller's PG. This allows Y to put first lien on assets. MVIC is used in appraiser community where the primary objective is to determine equity value of the business. They wrongly imply that in a stock purchase transaction occurs at such equity value.