Every business needs enough cash to pay its bills. Working capital is the amount of cash (or cash equivalents) left over after paying all the bills. It’s a very important measure of a company’s ability to fund ongoing operations and its growth. The definition of working capital is current assets minus current liabilities. In the context of selling your privately held technology company, buyers want to take possession of a company with enough liquidity (working capital) to fund operations without injecting more cash immediately after the deal closes. That’s why agreement between buyer and seller on the formula and amount of working capital that transfers is often one of the most heavily negotiated terms of the deal.
Why is working capital so heavily negotiated? To learn more, download a complimentary copy of "Working Capital in Tech M&A." Please fill out the form below.