When a buyer says they want to acquire a business “free of debt and with sufficient working capital to run the business,” they’re describing how the deal financials will work at completion. (Put simply, deal completion is when ownership changes hands and the buyer pays the seller.).
Debt free means the buyer expects to take over a clean balance sheet. Loans, overdrafts, unpaid taxes, shareholder loans and similar liabilities (sometimes staff leave depending on the leave type) are usually expected to be cleared by the seller before completion, or repaid out of the sale proceeds. In short, the buyer doesn’t want yesterday’s obligations.
Sufficient working capital means the business must have enough day-to-day funding to operate normally after the sale. That includes the right level of cash, receivables, inventory and payables so the buyer can pay staff and suppliers without immediately injecting new money. This level is typically based on what the business has historically needed to operate.
For sellers, the key point is that this language directly affects what you take home.
The headline price is often adjusted at completion depending on actual debt and working capital levels. Excess cash above the agreed working capital target usually stays with the seller, while any shortfall can reduce the price.
Interpreted correctly, this isn’t a negative — it’s a mechanism to deliver a fair outcome for both sides. But it does mean sellers should prepare early, understand their working capital dynamics, and lock in clear definitions before signing.
Experienced sell-side advice matters.
This is where experienced sell‑side advice matters. McKellar Partners helps sellers define debt and working capital clearly, run a disciplined NBIO / LOI process, and protect value by ensuring completion adjustments are understood, negotiated early, and aligned with the true value of the business.