Glossary · Your money in the deal
Capital distribution
In short
Money paid out from a business to its owners or shareholders. As a buyer, you care about past distributions as they affect available cash flow and future distributions as part of your return.
What it means in a deal
In an acquisition, examine the seller's historical capital distributions from the business. Excessive distributions might indicate insufficient reinvestment or an attempt to extract cash before sale, impacting the business's working capital. Project future distributions based on your expected cash flow after debt service. This is your personal return from the business.
Related terms
Common questions about Capital distribution
- Can life insurance be used to ensure fair distribution of assets among non-active heirs in a family business?
- Are there specific limits on the amount of working capital that can be included in a 7(a) Working Capital Pilot Program loan?
- What kind of everyday expenses can working capital cover?
- Can an SBA 7(a) loan finance working capital?
- What is the typical repayment term for working capital only?
- Can working capital be used for unexpected business expenses after closing?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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