I’m answering this question from the standpoint of company post-close liquidity. The industry will drive what proper company working capital requirements are. Monthly performance trends will inform as well. Is the company seasonal? The nature of how much net working capital is negotiated in the purchase and sale agreement will also inform how much working capital should be provided by the lender with term working cap and operating line of credit. How much growth is being planned for? There is not a one size fits all answer to the question.

We like to see 5%-8% of the total loan amount, depending on the type of business it is. Product-based businesses more than service-based,, for example.