Most deals don’t fail because of valuation. They fail because of cash.
On paper, a business may look profitable with growing revenue, stable margins, impressive EBITDA.
But beneath the numbers lies a quieter question investors increasingly ask: “How much cash does this business actually consume to grow?”
That answer sits inside working capital. And this is where surprises emerge. Receivables stretching beyond industry norms. Inventory accumulating faster than sales. Payables supporting profits temporarily. Seasonality masked as growth.
Traditional financial analysis often focuses on income statements. Serious investors focus on cash conversion cycles. Because working capital reveals what financial statements sometimes hide like revenue quality, customer bargaining power, operational discipline, supply chain stress, true scalability.
Two companies with identical EBITDA can have completely different valuations simply because one converts profit into cash faster. In due diligence today, working capital analytics is no longer a closing checklist item. It is a deal thesis validator.
For advisors and finance leaders, the shift is clear: The question is no longer “Is the business profitable?” It is “Can the business fund its own growth?” And increasingly, that answer decides whether a deal proceeds or quietly collapses.
