As a Canadian business owner preparing to sell your $10 to $50 million revenue company through a broadly marketed M&A process led by an M&A advisor, you’re likely navigating a complex but exciting transition. One critical concept that will arise during negotiations, particularly in the Letter of Intent (LOI) from a buyer, is working capital—and specifically, the requirement to leave a certain amount of working capital in the business as part of a share sale on a debt-free, cash-free basis. This article explains what working capital is, why it’s a focal point in the LOI, and how it impacts your sale.

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