Purchase Price "Net of Assets and Liabilities"

searcher profile

August 06, 2022

by a searcher from Fairfield University in New York, NY, USA

Does anyone have thoughts on what the below really means? I'm speaking with a seller who wants to sell for $2M "Net of Current Assets and Current Liabilities". I'm familiar with the concept of cash-free, debt free. Does this mean he is looking for $2M for the biz and then wants me to also buy-out the total of Assets + Liabilities. Might be over-thinking it...

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commentor profile
Reply by a searcher
from University of Pennsylvania in Ambler, PA 19002, USA
Agree with all the comments above. Sounds like his asking price is $2M and now the ball is in your court to evaluate the balance sheet/financials to determine what the true business valuation should be and how much out of pocket you will need to purchase the business.

Two questions I find very useful to ask: 1) What will the seller do with the $2M? 2) Ask yourself, why do you want this business vs other opportunities?
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Reply by an investor
from University of Pennsylvania in St. Louis, MO, USA
Agree - sounds like the seller wants $2M plus whatever the NWC would comprise. Not sure if this business has much in A/R, inventory or A/P, but I'd suggest walking through the balance sheet early and in detail with the seller to confirm what he keeps, what you'll take and what NWC needs to be delivered at closing.
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