Most business owners and even some advisers don’t understand how working capital impacts a business sale. So, what is working capital & why does it matter?

There is a lot of confusion about the treatment of working capital when selling a business.

Working capital features in business valuations, sale price allocation and sale adjustment calculations, to name just a few.

Most business owners and even some advisers don’t understand how working capital can impact on the goodwill of a business and how it is accounted for in the context of a business sale. The consequences of not knowing can be dramatic, with owners giving away substantial value without even realizing it.

The topic is too broad and too complex to cover in a single video, so we’ve broken it into a series of 3 videos so each aspect can be properly explained.

This is Video 1 of a series of 3 videos specifically on working capital in the context of a business sale transaction, the aim being to clear up any misconceptions and explain how optimizing working capital can benefit the existing owner.