AR purchase structure

thanks Brad, deal structure/ debt load works without the AR. I was thinking of the discount you mentioned, but wondered about common percentages.

I think you need to look at this from several angles. First, you need to figure out what your working capital requirement is in the deal. Usually a certain amount of working capital is staying in the company, which can come in the form of A/R. If the seller is keeping the A/R then you need to be sure they payoff the corresponding A/P. I have seen structures where some of the A/R goes to the seller post close but the buyer is responsible still for collecting that A/R. That prevents any confusion of who needs to pay what. But you do need to check the collectability of the A/R. If you are just paying for that A/R usually we will see some sort of discount applied to the A/R (most sellers are okay with a small 10% to 20% discount just for not having to worry about the hassle of collecting it) and in some cases a rep and warranty the seller carries back if it is no collectable. Just be sure if you are paying for the A/R and using debt to do so that the cash flow of the business is there to support that additional debt service. Ultimately you can only pay so much for the business so the price either includes the A/R or does not but should be a lower price for the business without it. Happy to discuss in more detail your specific situation and look at numbers and provide feedback. You can ping me here or at --@----.com Good luck.