This is a great topic and under-discussed! A couple friendly reminders: 1. SMB sellers often struggle to wrap their heads around a working capital peg (or just flat out won’t accept it). I had to forego the peg and just adjust the purchase price down by the amount of WC in my deal to make things simpler. Overall, this topic is probably the single biggest purchase price negotiation point, so fight hard for it! 2. Whatever cash you think you need to close, go ahead and double that number (at least), or have at least double in spare liquidity (revolver). You’ll thank me post-closing!

Nuanced, but sometimes it’s helpful to call out what is considered debt and what is working capital (e.g., customer deposits, unearned revenue, leases, etc.).