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Does the buyer want a lower or higher target working capital in the purchase agreement?

The buyer wants the target NWC balance to be as high as possible. The buyer will often try to take the high point of the NWC balance over the last 12 months or even forecast a higher NWC than has historically been achieved if the business is growing. The reason is that the buyer wants the target NWC to be greater than delivered NWC because the seller has to pay the buyer the difference.

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