I'm excited to join this community to share and learn from one another. I started this journey a few months ago and I'm looking forward to networking with many of you.

As it relates to Working Capital I understand that it can be included or excluded depending on the type of buyer and size of the business. When the price is >$5M and the buyer is a PEG, strategic investor, or search fund then the expectation is that Working Capital is included in the value. While businesses below $5m, with an individual buyer, and using SBA are excluding Working Capital. A few questions for the community:

1. is my above assumption reasonable?

2. thoughts on how to navigate the conversation with the Broker/Seller?

3. thoughts or approaches on how to value a business with or without NWC?

Further context: I'm reviewing an acquisition opportunity with an asking price of approx $5.5MM (3.5X SDE) which excludes NWC of approximately $1MM (+/- $200K depending on seasonality). I was looking to structure the deal with SBA/SN/Equity using 70/15/15 but the debt load is too heavy and ROE is not sufficient. I feel the $5.5M is a value that should include NWC and then the #s make sense. Would greatly appreciate any thoughts. Also, would appreciate any extra set of eyes on my deal structure and analysis so feel free to DM me if you can help.