Seller is pushing back on not providing WC at the time of close. Wanted to get the community's thoughts on how this should be considered? If seller is not providing WC, should the bank provide it or just needs to be more equity infused at the time of close?
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.It also depends on the deal size. The M&A Source/IBBA Market Pulse four quarter average as of 3Q20 reports that just 21% of deals below $2 million in purchase price included Working Capital, while 79% did not. In the $2 - $5 million range 44% included Working Capital, 56% did not. In the $5 - $50 million range, it shifts to 69% including working capital and 31% excluding it. In any size transaction, cash is usually not included in the price nor transferred to the buyer (even in a stock deal). For those transactions where Working Capital is not included in the price (or acquired explicitly, the lender usually provides a working capital loan in conjunction with the acquisition loan (i.e., you either borrow the WC as part of the acquisition price, or you borrow it explicitly as a working capital loan).