How the working capital target is set, and why it moves your price.
6.6
The buyer pays for a normal level of working capital and adjusts the price for anything above or below it at completion. The normal level is negotiated, so show your own month by month before they set theirs.
Stock, debtors and creditors at a level the business needs to trade normally. If there is less at completion, the price goes down. If there is more, it goes up.
Usually an average of the last twelve months. Seasonal businesses need care: an average taken at the wrong point in the year moves the price.
Build your own twelve month view, explain the seasonal swings, and agree the definition of each line before you agree the number.
Sources: Ordway sale mandates completed from 2019 to 2026, and the completion accounts for each. Reviewed by Daniel Okafor on 9 July 2026. Next review January 2027. This article is general information, not advice on your situation.
6.6
Next step
We reply within one working day, Monday to Friday.
8
21 Carver Lane
London EC2V 6DN
Level 9, Gate Village 3
Dubai, UAE
