Working capital calculation for SBA partial transfer of ownership

by a searcher from Northwestern University - Kellogg School of Management

3 months ago

How do you calculate the working capital that should be left in the business when you are buying 81% of the business under the new SBA rules? How much cash should be left in the business?

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4 comments

lender from University of Georgia

The % ownership does not impact that need as much as the actual operating expense need does. Figure out how long your cash conversion cycle is and expenses during that time. Make sure you have a cushion to get you through that period and to a point where you can start building up cash. That is how much you need.

3 months ago | like reply | 0 likes

lender from Eastern Illinois University

I am agree with ^Searchfunder member‌. If you let the seller pull all of the equity out of the working capital out of the business you will end up with a company that cannot operate post closing.

3 months ago | like reply | 1 like

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