Working capital transition in a asset purchase

by a searcher from Harvard University - Harvard Business School

3 years ago

The seller will keep the AR and AP while I will keep the inventory and customer deposit. What is the common process to handle this if we do not want the customers to get confused? What is the most efficient way for the seller and I to work on this together? We have $24M annual sales and so this is not a small operation.

5 likes
325 views
10 comments

intermediary from Miami University of Ohio

W/C is the biggest hurdle to negotiate between the buyer and seller.This has to be spelled out very carefully in the PA in order to have a successful transaction and transition.

2 years ago | like reply | 0 likes

searcher from University of Virginia-Darden - Darden School of Business

I am working a similar type of deal and the seller is really stuck on the physical invoicing to the customers. For instance, if the customer has already been billed will that invoice bill to the OldCo bank account then wouldnt you have to go back and update billing information to NewCo banking information? This seems trivial, but we are trying to limit the messaging to the customers of the sale to the greatest extent possible. Anyone have any tips or professional articles, ex that I can send to the seller to help ease her mind?I will freely admit I dont completely understand the billing logisitics for an asset sale.

2 years ago | like reply | 1 like

More on Searchfunder

Just Closed on My First Deal! Reflections and Takeaways for other Searchers

45,152 transactions are available on Searchfunder (now searchable by keyword)

Now everyone has unlimited IBISWorld access

Family office looking for traditional searchers

Examples of self-funded searcher websites

Investor seeking Self-Funded Search Deals

What are market terms for Seller Notes?

2 Best Ways To Find Motivated Sellers, Off-Market Deals

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.