The number one risk to survival for business buyers?

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October 30, 2025

by a professional in Windermere, FL 34786, USA

We've closed over $1.5 billion in SMB/ETA deals since 2022. Your number one risk to survival is inadequate working capital. Make sure the seller is prepared to leave a 'normalized level of working' capital, determined in financial diligence. And find a bank that will provide a line of credit. Otherwise, walk away!
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Reply by a searcher
from Yale University in Los Angeles, CA, USA
+ 1 on this, and I’d add that how working capital is structured at close is just as critical as ensuring the right amount is there. In many SMB transactions, you’re inheriting: supplier terms that may tighten post-sale, customers who may stretch payments once the founder leaves, and seasonal needs that fluctuate more than diligence models suggest If the buyer doesn’t build in a cushion for post-close behavior change, clear mechanics for true-up and variation, and access to liquidity as growth creates more working capital demand, it creates the same outcome as undercapitalization, just slower. IMO the riskiest moment in a transition isn’t Day 1, it’s Day 120, when you’ve taken over operations but haven’t yet put your balance sheet to work.
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Reply by a searcher
from George Washington University in Milton, FL 32571, USA
In your experience, does this increase the purchase price of the target? For example, if the owner leaves $200K in working capital, should you expect to pay $200K more for the business?
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