WORKING CAPITAL PEG

Hi All,
I recently put in a LOI with seller who verbally accepted to the terms but once it came time to put pen to paper backed out. Issue was with working capital target. I basically said that during diligence we would get a more clear understanding of net working capital required and then set a target for close based on historical needs. The seller wanted to provide me A/R on a loan that would be paid back over the course of a year. I dont have a PE background but always assumed this was generally included. So my question is: What is common for smaller businesses in the 600K to $1.2M SDE range? Is net working capital left out of the deal altogether and buyer brings whatever is needed at close? Or do you sometimes see net working capital included in the deal at this smaller size?
Thanks!



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