General question.
On an LOI I'm working on, I've asked for working capital to be included as part of the Enterprise Value. My plan is to supplement this with a line of credit initially to support operations and any delays associated with the transition of working capital post close.
I'm wondering if its overkill to build in some level of cash on my balance sheet as well. If so how much if I already have a line of credit and Working capital built into my deal?
Adding cash to my balance sheet will increase my debt service post close, and impact my DSCR. I'm worried if I'm already in the low end of the DSCR limit of 1.35, I might have to offer less for the business after adding that cash to the balance sheet making my offer less competitive. On the flip side the overcapitalizing the business I think will help me sleep at night.
Am I over analyzing it?
Working Capital and Cash on Balance Sheet

by a searcher from University of Massachusetts at Lowell
More on Searchfunder
Searchfunder is an online community and toolkit for searchfunds. Over 80% of those involved in searchfunds maintain a Searchfunder.com account to help them network, problem solve challenges, and keep up with the industry.
We maintain partnerships with database providers that make searching more effective, efficient and affordable along with features that help searchers find deals and investors and vice versa.
We maintain partnerships with database providers that make searching more effective, efficient and affordable along with features that help searchers find deals and investors and vice versa.
480 views
40 comments
Sign in to see all replies.
Create an account.