I'm in the process of buying a company.  As part of the purchase price
I am asking for a certain amount of working capital.  How normal and
acceptable is it to request that that working capital amount that I'm
requesting include an operating amount of cash in addition to accounts
receiveble, inventory, etc?  I realize that if there is an abnormally
high amount of cash on the Balance Sheet, that cash in considered
extra value and would be removed by the seller...but is it normal to
ask that a certain level of operating cash be left on the Balance
Sheet as a component of the working capital amount I'm asking for...or
is that operating cash normally also swept out by the seller?

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Clarification of Question by platerrp-ga on 24 Feb 2005 13:56 PST

To clarify further:  As part of the purchase price, I've asked for $2
million in working capital which is a reasonable amount based on the
operations of the company (which is a privately held corporation).  In
my mind I've assumed that part of that $2 million includes a
reasonable level of operating cash, say $200,000.  Is that a standard
assumption that the $2 million includes an operating cash component? 
The alternative would be that the seller would include no cash and
just increase a current asset account such as Accounts Receivable by
the $200,000 that I had figured as cash.  How are these things
typically done...all cash assumed swept or some level of operating
cash left in the business?

What type of company is it ?

If it is a LLC (or some sort of corporate entity) then sweeping the
cash out could be a nuisance.

Whichever way one looks at it, you will be 'paying cash for cash'.

It might be at a small discount or premium, depending on who would be
inconvenienced.