Managing Seasonality in LOI

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by a searcher from University of Washington
in Seattle, WA, USA

3h ago

Managing Seasonality in LOI

Hi all, I’m working on an LOI for a business that generates the majority of its profit in 6 months of the year. The remaining 6 months has slower sales and generates little or no cashflow. On our current timeline, I’d acquire the business right as it hits the slower months so I’d be in an immediate cash crunch or dip into a line of credit. Any advice on to avoid this while still moving forward? A few options I’ve considered: - set ownership of payables and receivables several months after the actual close - reduce the deal price or increase working capital peg to account for 6 months of reduced/negative cash flow Any other suggestions?

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