WORKING CAPITAL PEG FOR AN UNUSUAL TRANSACTION - HOW TO GO ABOUT IT?

Hi everybody, I am reviewing a potential deal with the following profile. The question is, how to deal with NWC Peg in these circumstances?

TTM Revenue - $6M TTM EBITDA - $0.6M TTM Current assets (A/R + Inventory, excluding cash) - $3.2M TTM Current liabilities (A/P and other current liabilities) - $0.8M
TTM Cash: $0.2M

Now, working capital is current assets - current liabilities = $2.4M per above example.

Assume valuation at 4x multiple - $2.4M.

As you can see, the TTM WC is equal to the Enterprise Value! How to deal with the NWC Peg in this unusual situation??



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