How much is your business worth and what can you do to increase the value of what you have built? Even if you’re not planning on selling your business in the near future, there are several strategies that every business owner should employ to build a better company and create more value. As part of this effort, it is important to understand that overall value is typically determined both as a function of your earnings and financial position and the inherent strength of your business (off balance sheet items).

Business owners who negotiate a sale transaction without the assistance of a professional M&A advisor tend to focus heavily on purchase price negotiations in terms of a multiple of Earnings before Interest, Taxes, Depreciation, and Amortization (EBITDA) or revenue; however, there is an equally important negotiation that is often overlooked that can impact total transaction value by potentially millions of dollars: the working capital deliverable at closing.