Current owner/operator here. I’ve done two SBA loans in the past, so I’m fairly familiar with SBA financing. My husband and I are now looking to acquire another business. Like everyone else searching, I sift through dozens of questionable deals to find the occasional good one. I recently submitted an LOI on what I considered a solid business, but it was rejected because our offer was apparently “far” below the other offers. We have significant liquidity/assets and are very financeable. I based our offer on what the business could actually support at roughly a 1.25–1.5x DSCR, which came out to around 3x bank-adjusted SDE based on the tax returns. The business is a commercial vehicle/fleet graphics company. At the time of our offer, it had $200K+ in AR. I structured the LOI so the seller would keep the AR, meaning we would have to bring/fund the working capital necessary to operate the business after closing. This is where I’d love some perspective from people who have acquired businesses with meaningful AR and working-capital requirements. My previous experience has primarily been with recurring/contracted-revenue businesses, so working capital wasn’t nearly as significant. Interestingly, the last two businesses I’ve seriously considered both had substantial AR because they perform/fund the work first and invoice after delivery on net terms. My thinking was: ~3x bank-adjusted SDE + seller retains $200K+ of AR + buyer funds the required working capital = a reasonably strong offer. But perhaps I’m looking at the structure incorrectly. For those who have bought project/service businesses with significant AR: How do you account for AR and normalized working capital when determining enterprise value and structuring the offer? If the seller keeps all pre-closing AR, would you generally expect that to affect the purchase price since the buyer has to recapitalize the business at closing? Would especially appreciate input from buyers who have closed SBA acquisitions, SBA lenders, and M&A professionals who regularly work with working-capital-intensive businesses.