Help navigating acquisition deal with $250k in A/R

July 30, 2025

by a searcher from George Washington University in Seattle, WA, USA

I'm under LOI. There is about $250k in A/R. The business is expense heavy. The seller would include A/R, but the asking price would need to be adjusted. I am concerned that the working capital I have might not be enough to get through the first cycle. Any thoughts on how best to navigate/negotiate this?

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Reply by a professional
from University of Michigan in Detroit, MI, USA

Hi Anon, you can't close unless you have sufficient working capital. That's the bottom line. Otherwise, you'll be heading into a rocky few months. Start by having your financial team establish the working capital needs of the company. The purchase price should be pegged around those needs. That is, if the business has too little the purchase price is reduced and vice versa. Sometimes, SMBs are sold without working capital--the buyer brings it to the table. But that often only works with very small businesses. Lastly, small businesses are often sold cash free debt free. If that is the case, you'll want to organize an LOC regardless of how your proceed. Hopefully that helps. Let me know if you want to discuss further. Reach out at redacted

Reply by an intermediary
from City University of New York (CUNY) System in Wesley Chapel, FL, USA

Small deals tend to be light on WC. Although we see all deals in the middle market contain WC, many smaller deals tend not to include it. You need to do a careful analysis, especially if it is a seasonal business. If A/R is not included (or some cash for that matter), you will need to adjust PP down and get a LOC to carry you through. Many smaller owners think all the cash and equivalents (including cash in bank, pre-paids, and A/R (because 'they' earned it) are theirs, but no lender is going to allow title to the business to pass to you, and on your first day you are already technically insolvent. Explain to the owner that they could not keep the business operating at the level they are at without the WC in business, and the WC technically belongs to the company that they are selling - not them!

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