Working capital is where deals get weird.
Buyers think they’re paying twice. Sellers think buyers are playing games. Sometimes both are right.
Here’s the clean version:
- The buyer wants the business to function on day one.
- That means enough receivables, payables, cash flow, and inventory to operate normally.
- So deals often include a normalized working capital target.
If your working capital is seasonal or messy, you need to explain it early. If you don’t, it becomes a late-stage fight.
What to do this week
- Calculate average working capital over the last 12 months.
- Identify seasonality and document it.
- Discuss working capital expectations before you negotiate final terms.